[Federal Register Volume 88, Number 9 (Friday, January 13, 2023)]
[Proposed Rules]
[Pages 2430-2500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28098]



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Vol. 88

Friday,

No. 9

January 13, 2023

Part III





Department of the Interior





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Bureau of Indian Affairs





25 CFR Part 226





Mining of the Osage Mineral Estate for Oil and Gas; Proposed Rule

  Federal Register / Vol. 88, No. 9 / Friday, January 13, 2023 / 
Proposed Rules  

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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 226

[Docket No. BIA-2022-0006; 2231A2100DD/AAKC001030/A0A501010.999900; OMB 
Control Number 1076-0180, 1012-0004, 1012-0006]
RIN 1076-AF59


Mining of the Osage Mineral Estate for Oil and Gas

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Indian Affairs (BIA) proposes to revise the 
regulations governing leasing of the Osage Nation's mineral estate 
(``Osage Mineral Estate'') for oil and gas mining. The proposed rule 
would allow the BIA to strengthen management of the Osage Mineral 
Estate by updating bonding, royalty payment and reporting, production 
valuation and measurement, site security, and operational requirements 
to address changes in technology and industry standards that have 
occurred in the 47 years since the regulations were issued. The 
proposed rule would also allow the BIA to respond to recommendations 
made by the Office of Inspector General, U.S. Department of the 
Interior (OIG).

DATES: Proposed Regulations: Submit your comments on the proposed rule 
to the BIA on or before March 17, 2023. Information Collection 
Requirements: Submit your comments on the information collection 
requirements in the proposed rule on or before March 17, 2023. Public 
Meeting: A public meeting will be held on February 8, 2023, 6:30 p.m. 
to 9 p.m. central time.

ADDRESSES: 
    Proposed Regulations: You may submit your comments on the proposed 
rule by any of the methods listed below.
     Federal Rulemaking Portal: https://www.regulations.gov. 
Enter ``RIN 1076-AF59'' in the search box and click ``Search.'' Follow 
the instructions for sending comments.
     Mail: U.S. Department of the Interior, Eastern Oklahoma 
Region, Bureau of Indian Affairs, Attn: Regional Director, P.O. Box 
8002, Muskogee, OK 74402. All submissions must include the words 
``Bureau of Indian Affairs'' or ``BIA'' and ``RIN 1076-AF59.''
     Hand Delivery/Courier: U.S. Department of the Interior, 
Eastern Oklahoma Region, Bureau of Indian Affairs, Attn: Regional 
Director, 3100 W Peak Boulevard, Muskogee, OK 74402.
    Public Meeting: The BIA is holding a public meeting on the Proposed 
Rule on Wednesday, February 8, 2023, from 6:30 p.m. to 9 p.m. central 
time at the Osage Casino and Hotel, 5591 W Rogers Boulevard, Skiatook, 
OK 74070. Please see SUPPLEMENTARY INFORMATION, Section II, Public 
Comment Procedures, for details.
    Information Collection Requirements: Comments on the information 
collection requirements in the proposed rule must be submitted to 
Steven Mullen, Information Collection Clearance Officer, Office of 
Regulatory Affairs and Collaborative Action--Indian Affairs, U.S. 
Department of the Interior, 1001 Indian School Road NW, Suite 229, 
Albuquerque, NM 87104; or by email to [email protected] with a copy to 
[email protected]. All submissions must include the 
applicable Office of Management and Budget (OMB) Control Number(s) for 
the BIA or ONRR information collection(s) you are commenting on:
     OMB Control Number 1076-0180, Mining of the Osage Mineral 
Estate for Oil and Gas.
     OMB Control Number 1012-0004, Royalty and Production 
Reporting.
     OMB Control Number 1012-0006, Suspensions Pending Appeal 
and Bonding.

FOR FURTHER INFORMATION CONTACT: Oliver Whaley, Director, Office of 
Regulatory Affairs and Collaborative Action, Office of the Assistant 
Secretary--Indian Affairs, (202) 738-6065, [email protected].

SUPPLEMENTARY INFORMATION: 
I. Executive Summary
II. Public Comment Procedures
III. Background
IV. Incorporation by Reference of Industry Standards
V. Discussion of Proposed Changes
VI. Procedural Matters

I. Executive Summary

    The purpose of this proposed rule is to amend 25 CFR part 226, 
Leasing of Osage Reservation Lands for Oil and Gas Mining, to 
strengthen the Bureau of Indian Affairs' (BIA) management and 
administration of the Osage Mineral Estate. The last major substantive 
revisions to the regulations in 25 CFR part 226 occurred in 1974, with 
many provisions having remained virtually unchanged since well before 
then. As a result, the regulations are outdated, inconsistent with 
industry standards, and do not reflect technological advancements or 
modern oil and gas operations within the Osage Mineral Estate. The BIA 
believes that the proposed rule updating the regulations makes critical 
changes that will improve accounting and production measurement 
standards; offer consistency in production valuation; address 
inadequate bonding; support the implementation of electronic reporting 
systems; enhance accountability; clarify lessees' obligations; prevent 
waste; promote safe and environmentally sound operations; and protect 
resource values. The BIA also believes that the proposed rule will 
allow it to take the necessary actions to resolve certain 
recommendations made by the Office of Inspector General, U.S. 
Department of the Interior (OIG).
    In 2013, the OIG performed an assessment of the BIA Osage Agency's 
effectiveness in managing the Osage Mineral Estate. On October 20, 
2014, the OIG issued its final evaluation report, titled ``BIA Needs 
Sweeping Changes to Manage the Osage Nation's Energy Resources.'' While 
the OIG acknowledged the complexity of managing the Osage Mineral 
Estate due, in part, to the number of competing interests, it 
documented multiple deficiencies in the BIA Osage Agency's management 
of the oil and gas program and called for broad reform.
    The OIG report set forth 33 recommendations for improvement of the 
BIA Osage Agency's oil and gas program. The first issue the OIG report 
addressed was deficiencies in the regulations in 25 CFR part 226. 
Specifically, the OIG found that the existing regulations are vague, 
inadequate, and fail to mirror the oil and gas regulations governing 
the rest of Indian country. Accordingly, the OIG recommended that the 
BIA ``use its authority to correct program deficiencies by modifying 25 
CFR part 226 to mirror other Indian Country oil and gas regulations.'' 
The OIG also identified issues with accounting, reconciliation, bonding 
requirements, royalty and production reporting, inspections, lease 
compliance, and enforcement measures, among other things. The BIA Osage 
Agency resolved 26 of the OIG's recommendations through the 
implementation of new and revised policies and procedures but 
determined that the remaining seven recommendations could not be fully 
resolved without revision of the regulations in 25 CFR part 226.
    This proposed rule modernizes the regulations and brings them in 
line with the regulations governing oil and gas leasing and development 
throughout the rest of Indian country consistent with the OIG's 
recommendation. In addition, the proposed rule will allow the BIA Osage 
Agency to respond to the open OIG recommendations regarding engagement 
of the Office of Natural Resources Revenue (ONRR) to perform accounting 
and compliance activities,

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implementation of ONRR's electronic reporting systems, reconciliation 
of royalty payments, verification of allowances and arm's-length sales 
transactions, and the implementation of sampling thresholds. These 
revisions are critical to ensure that oil and gas produced from the 
Osage Mineral Estate is properly accounted for and lessees timely pay 
the correct and full amount of royalties due to the Osage Nation.

II. Public Comment Procedures

    If you wish to comment on this proposed rule, you may submit your 
comments to the BIA by mail, hand delivery/courier, or through https://www.regulations.gov (see ADDRESSES). Please make your comments on the 
proposed rule as specific as possible, provide a detailed explanation 
of any changes you recommend, and include any relevant supporting 
documentation. Where possible, your comments should reference the 
specific section or paragraph of the proposed rule that you are 
addressing. The BIA is not obligated to consider comments received 
after the comment period closes (see DATES) or comments delivered to an 
address, or using methods other than, those identified (see ADDRESSES).
    Comments, including the names and street addresses of respondents, 
will be available for public review at the BIA Eastern Oklahoma 
Regional Office, 3100 W Peak Boulevard, Muskogee, OK 74402, during 
regular business hours (8 a.m. to 4:30 p.m.), Monday through Friday, 
except holidays. Before including your address, phone number, email 
address, or other personal identifying information in your comment, 
please be advised that your entire comment--including your personal 
identifying information--may be made publicly available at any time. 
While you can ask the BIA to withhold your personal identifying 
information from public review in your comment, we cannot guarantee 
that we will be able to do so. As discussed in detail below, this 
proposed rule would include revisions to information collection 
requirements that must be approved by the Office of Management and 
Budget (OMB). If you wish to comment on the revised information 
collection requirements in this proposed rule, you must send such 
comments directly to the OMB (see ADDRESSES).
    The BIA is holding a public meeting on the Proposed Rule on 
Wednesday, February 8, 2023, from 6:30 p.m. to 9 p.m. central time at 
the Osage Casino and Hotel, 5591 West Rogers Boulevard, Skiatook, OK 
74070. At the meeting, you may sign up for a two-minute time slot to 
provide verbal comments on the Proposed Rule. The BIA requests that 
groups or organizations wishing to provide verbal comments elect a 
single representative to speak on behalf of the group or organization.

III. Background

A. Osage Allotment Act

    In 1872, the U.S. Congress established a reservation for the Osage 
Nation in the Oklahoma Territory. On June 16, 1906, Congress passed the 
Oklahoma Enabling Act, Public Law 59-234, 34 Stat. 256, joining the 
Oklahoma Territory with Indian Territory to form the state of Oklahoma. 
Shortly thereafter, Congress passed the Act of June 28, 1906, Public 
Law 59-321, 34 Stat. 539 (1906 Act), titled an ``Act for the division 
of the lands and funds of the Osage Indians in Oklahoma Territory.'' 
The 1906 Act provided for the allotment of the Osage Nation's lands to 
individual Tribal members. Upon statehood in 1907, the Osage Indian 
Reservation, comprising approximately 1,475,000 acres, became Osage 
County, Oklahoma.
    Section 3 of the 1906 Act, as amended, severed the surface estate 
from the subsurface mineral estate, reserving all oil, gas, coal, and 
other minerals to the Osage Nation in perpetuity. Accordingly, the 
United States holds the subsurface mineral estate in Osage County, 
Oklahoma (``Osage Mineral Estate'') in trust for the benefit of the 
Osage Nation. The 1906 Act authorizes the Osage Nation to lease the 
Osage Mineral Estate for oil, gas, and other mineral development ``with 
the approval of the Secretary of the Interior, and under such rules and 
regulations as he may prescribe.'' The Secretary of the Interior 
delegated this authority to the Superintendent of the BIA Osage Agency. 
See 209 Departmental Manual 8.1(A).
    Section 4 of the 1906 Act, as amended, required that the United 
States hold the revenues derived from the Osage Mineral Estate in trust 
and distribute the funds to individual Tribal members on the authorized 
roll of membership in a timely (quarterly) and proper (pro rata with 
interest) basis. This prospective right to share in the royalties, 
rental, and bonuses derived from the Osage Mineral Estate is referred 
to as a ``headright.'' See Act of October 30, 1984, Pub. L. 98-605, 
section 11, 98 Stat. 3163.

B. Osage Tribal Trust Settlement and Negotiated Rulemaking

    On October 14, 2011, the United States and Osage Nation signed the 
Osage Tribal Trust Settlement (Settlement) resolving litigation 
regarding the United States' alleged mismanagement of the Osage Mineral 
Estate along with other unrelated breach of trust claims. As part of 
the Settlement, the Department of the Interior (Department) agreed to 
engage in negotiated rulemaking with the Osage Nation pursuant to 5 
U.S.C. 561-570a and revise the regulations in 25 CFR part 226 to 
improve management of the Osage Mineral Estate. The negotiated 
rulemaking process began on June 18, 2012, when the Department 
published a notice of the intent to establish an Osage Negotiated 
Rulemaking Committee (Committee). See 77 FR 36226.
    On July 31, 2012, the Department announced the establishment of the 
Committee, comprised of four Federal Government representatives and 
five members of the Osage Minerals Council who were selected by Council 
vote. See 77 FR 45301. The Osage Minerals Council representatives on 
the Committee identified five priority areas to be discussed during 
negotiations: (1) modernization of royalty value and royalty rate for 
oil production; (2) modernization of royalty value, royalty rate, and 
royalty calculations for gas production; (3) strengthening drilling 
obligations for oil lessees; (4) requiring detailed electronic 
reporting by all lessees; and (5) strengthening oil gauging and gas 
meter inspection, calibration, and adjustment.
    The Committee held the first public meeting in August 2012 and, 
except for December 2012, met monthly until April 2013. On April 25, 
2013, the Negotiated Rulemaking Committee submitted its Consensus 
Report to the Department on a package of proposed revisions to the 
regulations, completing the negotiated rulemaking process required by 
the Settlement. The Department published the proposed rule based on the 
Committee's recommendations on August 28, 2013. See 78 FR 53083. The 
Department received, evaluated, and responded to a significant number 
of public comments on the proposed rule and amended the regulations to 
make necessary changes in accordance therewith. On May 11, 2015, the 
Department published the final rule, which had an effective date of 
July 10, 2015. See 80 FR 26994.
    On July 1, 2015, the Osage Minerals Council and Osage Producers 
Association each filed suit in the U.S. District Court for the Northern 
District of Oklahoma (Court), seeking to enjoin implementation of the 
final rule. The arguments advanced in the lawsuits included, among 
other things, claims that the final rule conflicted with the 1906 Act, 
would impose administrative costs that would lead to decreased

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production, and the Department failed to complete the analyses required 
by the Regulatory Flexibility and Small Business Regulatory Enforcement 
Acts. The Court consolidated the two lawsuits and entered an order 
enjoining implementation of the final rule pending resolution of the 
litigation.
    Upon review of the issues raised in the litigation, the Department 
determined that a voluntary remand of the final rule was appropriate. 
The Osage Minerals Council and Osage Producers Association supported 
such action. On November 19, 2015, the Department filed the Joint 
Motion for Voluntary Remand and the Court, in turn, entered the 
Judgment of Remand. As a result of the remand, the 2015 final rule 
never went into effect. Accordingly, the version of 25 CFR part 226 
that was in effect prior to publication of the final rule remained 
operative. To ensure that the correct version of the regulations 
appeared in the CFR, the Department published a final rule formally 
confirming that the prior version of 25 CFR part 226 (last updated in 
1974) remained in full force and effect. See 81 FR 39572.

C. Current Rulemaking

    Following remand of the 2015 final rule, the BIA determined that it 
was appropriate to review the regulations in 25 CFR part 226 to 
consider whether, and to what extent, the regulations should be revised 
to strengthen the BIA's management and administration of the Osage 
Mineral Estate. On September 22, 2016, the BIA mailed letters to the 
Principal Chief of the Osage Nation and Chairman of the Osage Minerals 
Council requesting government-to-government consultation (consultation) 
regarding the need for such revisions. On October 25, 2016, the BIA 
held a consultation with representatives from the Osage Nation 
Executive and Legislative Branches, the Osage Minerals Council, and 
their legal counsel, in Pawhuska, Oklahoma. The outcome of the 
consultation was agreement by all parties that revision of the 
regulations was necessary. See Section VI, Procedural Matters, for 
additional information regarding the Tribal consultation process for 
the proposed rule.
    The current effort to revise the regulations in 25 CFR part 226 is 
not a continuation of the negotiated rulemaking process undertaken 
pursuant to the Settlement, nor is it a republication of the 2015 final 
rule.

IV. Incorporation by Reference of Industry Standards

    This proposed rule would incorporate industry standards and 
recommended practices, either in whole or in part, without republishing 
the standards in their entirety in the CFR. This practice is known as 
incorporation by reference (IBR). These standards currently apply to 
all federal and Indian lands except those within Osage County, 
Oklahoma. The BIA reviewed these standards and determined that they 
achieve the intent of 25 CFR 226.106 through 226.116 and 25 CFR 226.120 
through 226.141 of the proposed rule. The proposed rule proposes to 
incorporate the versions of the standards listed. Some of the standards 
referenced would be incorporated in their entirety. For other 
standards, the BIA would incorporate only those sections that are 
relevant to the rule, meet the intent of 25 CFR 226.0, and do not 
require further clarification.
    The National Technology Transfer and Advancement Act (NTTAA), 
Public Law 104-113, 15 U.S.C. 3701, et seq., states that ``all Federal 
agencies and departments shall use technical standards that are 
developed by consensus standards bodies, using such technical standards 
as a means to carry out policy objectives or activities determined by 
the agencies or departments,'' subject to certain exceptions. The BIA 
may incorporate these standards into its regulations by reference 
without republishing the standards in their entirety in the 
regulations. The legal effect of IBR is that the incorporated standards 
would become regulatory requirements. The incorporated standards, like 
any other regulation, have the force and effect of law. Accordingly, 
lessees and other regulated parties would be required to comply with 
the standards incorporated by reference in the regulations.
    The Office of the Federal Register (OFR) regulations governing IBR 
are set forth in 1 CFR part 51. The industry standards for this 
proposed rule are eligible for incorporation pursuant to 1 CFR 51.7 
because, among other things, they substantially reduce the volume of 
material published in the Federal Register; are published, bound, 
numbered, and organized; and are readily available to the public free 
of charge or through purchase from the standards organization or 
through inspection at the BIA Osage Agency. The IBR language in Sec.  
226.0 meets the requirements set forth in 1 CFR 51.9. Where 
appropriate, the BIA would incorporate by reference an industry 
standard governing a particular process and impose requirements that 
add to, or modify, the requirements imposed by that standard (e.g., the 
BIA sets a specific value for a variable where the industry standard 
proposed a range of values or options).
    All American Petroleum Institute (API) materials are available for 
inspection and purchase at the API, 200 Massachusetts Avenue NW, Suite 
1100, Washington, DC 20001, (202) 682-8000. API also offers free, read-
only access to the standards in the API IBR Reading Room at https://publications.api.org. All American Gas Association (AGA) standards are 
available for inspection and purchase from AGA, 400 North Capitol 
Street NW, Suite 450, Washington, DC 20001, (202) 824-7000, https://www.aga.org/publication-store. All Gas Processors Association (GPA) 
standards are available for inspection and purchase from GPA, 6526 E 
60th Street, Tulsa, OK 74145, (918) 493-3872, https://my.midstreamassociation.org/publications-store/publications.
    The following industry standards and recommendations are proposed 
for incorporation by reference, in whole or in part, in subpart J of 
the proposed rule:
     API Manual of Petroleum Measurement Standards (MPMS), 
Chapter 2--Tank Calibration, Section 2A, Measurement and Calibration of 
Upright Cylindrical Tanks by the Manual Tank Strapping Method; First 
Edition, February 1995; Reaffirmed 2017 (``API 2.2A''). This standard 
describes calibration procedures for upright cylindrical tanks used for 
storing oil.
     API MPMS Chapter 2--Tank Calibration, Section 2B, 
Calibration of Upright Cylindrical Tanks Using the Optical Reference 
Line Method; First Edition, March 1989; Reaffirmed April 2019; Addendum 
1, October 2019 (``API 2.2B''). This standard describes measurement and 
calibration procedures for determining the diameters of upright welded 
cylindrical tanks or vertical cylindrical tanks with a smooth surface 
and either floating or fixed roofs.
     API MPMS Chapter 2--Tank Calibration, Section 2C, 
Calibration of Upright Cylindrical Tanks Using the Optical-
triangulation Method; First Edition, January 2002; Reaffirmed April 
2019 (``API 2.2C''). This standard describes a calibration procedure 
for tanks above 26 feet in diameter with cylindrical courses that are 
substantially vertical.
     API MPMS Chapter 3.1A, Standard Practice for the Manual 
Gauging of Petroleum and Petroleum Products; Third Edition, August 
2013; Reaffirmed

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December 2018 (``API 3.1A''). This standard describes the: (a) 
procedures for manually gauging the liquid level of petroleum and 
petroleum products in non-pressure fixed roof tanks; (b) procedures for 
manually gauging the level of free water that may be found with the 
petroleum or petroleum products; (c) methods used to verify the length 
of gauge tapes under field conditions and the influence of bob weights 
and temperature on the gauge tape length; and (d) influences that may 
affect the position of gauging reference point (either the datum plate 
or the reference gauge point).
     API MPMS Chapter 3--Tank Gauging, Section 1B--Standard 
Practice for Level Measurement of Liquid Hydrocarbons in Stationary 
Tanks by Automatic Tank Gauging; Third Edition, April 2018 (``API 
3.1B''). This standard describes the level measurement of liquid 
hydrocarbons in stationary, above ground, atmospheric storage tanks 
using ATGs. This standard also discusses automatic tank gauging in 
general, including the accuracy, installation, commissioning, 
calibration, and verification of ATGs that measure either innage or 
ullage.
     API MPMS Chapter 3--Tank Gauging, Section 6, Measurement 
of Liquid Hydrocarbons by Hybrid Tank Measurement Systems; First 
Edition, February 2001; Errata September 2005; Reaffirmed January 2017 
(``API 3.6''). This standard describes the selection, installation, 
commissioning, calibration, and verification of Hybrid Tank Measurement 
Systems. This standard also provides a method of uncertainty analysis 
to enable users to select the correct components and configurations to 
address for the intended application.
     API MPMS Chapter 4--Proving Systems, Section 1, 
Introduction; Third Edition, February 2005; Reaffirmed June 2014 (``API 
4.1''). Section 1 is a general introduction to the subject of proving 
meters.
     API MPMS Chapter 4--Proving Systems, Section 2--
Displacement Provers; Third Edition, September 2003; Reaffirmed March 
2011; Addendum February 2015 (``API 4.2''). This standard outlines the 
essential elements of meter provers that do, and do not, accumulate a 
minimum of 10,000 whole meter pulses between detector switches and 
provides design and installation details for the types of displacement 
provers that are currently in use. The provers discussed in this 
chapter are designed for proving measurement devices under dynamic 
operating conditions with single-phase liquid hydrocarbons.
     API MPMS Chapter 4.5, Master- Meter Provers; Fourth 
Edition, June 2016 (``API 4.5''). This standard covers the use of 
displacement and Coriolis meters as master meters. The requirements in 
this standard are for single-phase liquid hydrocarbons.
     API MPMS Chapter 4--Proving Systems, Section 6, Pulse 
Interpolation; Second Edition, May 1999; Errata April 2007; Reaffirmed 
October 2013 (``API 4.6''). This standard describes how the double-
chronometry method of pulse interpolation, including system operating 
requirements and equipment testing, is applied to meter proving.
     API MPMS Chapter 4.8, Operation of Proving Systems; Second 
Edition, September 2013 (``API 4.8''). This standard provides 
information for operating meter provers on single-phase liquid 
hydrocarbons.
     API MPMS Chapter 4--Proving Systems, Section 9--Methods of 
Calibration for Displacement and Volumetric Tank Provers, Part 2-- 
Determination of the Volume of Displacement and Tank Provers by the 
Waterdraw Method of Calibration; First Edition, December 2005; 
Reaffirmed July 2015 (``API 4.9.2''). This standard provides all the 
procedures required to determine the field data necessary to calculate 
a Base Prover Volume of Displacement Provers by the Waterdraw Method of 
Calibration.
     API MPMS Chapter 5--Metering, Section 6--Measurement of 
Liquid Hydrocarbons by Coriolis Meters; First Edition, October 2002; 
Reaffirmed November 2013 (``API 5.6''). This standard applies to 
custody-transfer applications for liquid hydrocarbons and covers the 
API standards used in the operation of Coriolis meters, proving and 
verification using volume-based methods, installation, operation, and 
maintenance.
     API MPMS Chapter 6, Metering Assemblies, Section 1--Lease 
Automatic Custody Transfer (LACT) Systems; Second Edition, May 1991; 
Reaffirmed May 2012 (``API 6.1''). This standard describes the design, 
installation, calibration, and operation of a LACT system.
     API MPMS Chapter 7, Temperature Determination, Section 1--
Liquid-in- Glass Thermometers; Second Edition, August 2017 (``API 
7.1''). This standard describes how to use various types of liquid-in-
glass thermometers to accurately determine the temperatures of 
hydrocarbon liquids. This standard is proposed for incorporation for 
its standards covering the use of liquid-in-glass thermometers for 
temperature determination in tank-gauging operations.
     API MPMS Chapter 7--Temperature Determination, Section 2-- 
Portable Electronic Thermometers; Third Edition, May 2018 (``API 
7.2''). This standard describes the methods, equipment, and procedures 
for manually determining the temperature of liquid petroleum and 
petroleum products by use of a portable electronic thermometer. This 
standard is proposed for incorporation for its standards covering the 
use of portable electronic thermometers for temperature determination 
in tank gauging operations.
     API MPMS Chapter 7--Temperature Determination, Section 4-- 
Dynamic Temperature Measurement; Second Edition, January 2018 (``API 
7.4''). This standard describes methods, equipment, installation, and 
operating procedures for the proper determination of the temperature of 
hydrocarbon liquids under dynamic conditions in custody transfer 
applications. This standard is proposed for incorporation for its 
standards covering the use of dynamic temperature determination in LACT 
and CMS operations.
     API MPMS Chapter 8.1, Standard Practice for Manual 
Sampling of Petroleum and Petroleum Products; Fourth Edition, October 
2013, (``API 8.1''). This standard covers procedures and equipment for 
manually obtaining samples of liquid petroleum and petroleum products 
from the sample point into the primary containers.
     API MPMS Chapter 8.2, Standard Practice for Automatic 
Sampling of Petroleum and Petroleum Products; Fourth Edition, November 
2016 (``API 8.2''). This standard describes general procedures and 
equipment for automatically obtaining samples of liquid petroleum, 
petroleum products, and crude oils from a sample point into a primary 
container.
     API MPMS Chapter 8--Sampling, Section 3--Standard Practice 
for Mixing and Handling of Liquid Samples of Petroleum and Petroleum 
Products; First Edition, October 1995; Reaffirmed, March 2015 (``API 
8.3''). This standard covers the handling, mixing, and conditioning 
procedures required to ensure that a representative sample of the 
liquid petroleum or petroleum product is delivered from the primary 
sample container/receiver into the analytical test apparatus or into 
intermediate containers.
     API MPMS Chapter 9.1, Standard Test Method for Density, 
Relative Density, or API Gravity of Crude Petroleum and Liquid 
Petroleum Products by Hydrometer Method; Third Edition, December 2012; 
Reaffirmed, May 2017 (``API 9.1''). This standard

[[Page 2434]]

covers the determination of the density, relative density, or API 
gravity of crude petroleum, petroleum products, or mixtures of 
petroleum and non-petroleum products normally handed as liquids have a 
Reid vapor pressure of 101.325 Kilopascal (kPa) (14.696 psi) or less, 
using a glass hydrometer in conjunction with a series of calculations.
     API MPMS Chapter 9.2, Standard Test Method for Density or 
Relative Density of Light Hydrocarbons by Pressure Hydrometer; Third 
Edition, December 2012; Reaffirmed, May 2017 (``API 9.2''). This 
standard covers the determination of the density or relative density of 
light hydrocarbons including liquefied petroleum gases having a Reid 
vapor pressure exceeding 101.325 kPa (14.696 psi).
     API MPMS Chapter 9.3, Standard Test Method for Density, 
Relative Density, and API Gravity of Crude Petroleum and Liquid 
Petroleum Products by Thermohydrometer Method; Third Edition, December 
2012; Reaffirmed, May 2017 (``API 9.3''). This standard covers the 
determination of the density, relative density, or API gravity of crude 
petroleum, petroleum products, or mixtures of petroleum and non-
petroleum products normally handed as liquids and having a Reid vapor 
pressure of 101.325 kPa (14.696 psi) or less, using a glass 
thermohydrometer in conjunction with a series of calculations.
     API MPMS Chapter 10.4, Determination of Water and/or 
Sediment in Crude Oil by the Centrifuge Method (Field Procedure); 
Fourth Edition, October 2013; Errata, March 2015 (``API 10.4''). This 
standard describes the field centrifuge method for determining both 
water and sediment, or sediment only, in crude oil.
     API MPMS Chapter 11--Physical Properties Data, Section 1--
Temperature and Pressure Volume Correction Factors for Generalized 
Crude Oils, Refined Products and Lubricating Oils; May 2004; Addendum 
1, September 2007, Addendum 2, May 2019; Reaffirmed, August 2012 (``API 
11.1''). This standard provides the algorithm and implementation 
procedure for the correction of temperature and pressure effects on 
density and the volume of liquid hydrocarbons that fall within the 
categories of crude oil.
     API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 2--
Measurement Tickets; Third Edition, June 2003; Reaffirmed February 2016 
(``API 12.2.2''). This standard provides standardized calculation 
methods for the quantification of liquids and specifies the equations 
for computing correction factors, rules for rounding, calculation 
sequences, and discrimination levels to be employed in the 
calculations.
     API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 3--Proving 
Report; First Edition, October 1998; Reaffirmed May 2014 (``API 
12.2.3''). This standard provides standardized calculation methods for 
the determination of meter factors under defined conditions. The 
criteria contained in this standard will allow entities using various 
computer languages on different computer hardware (or by manual 
calculations) to arrive at identical results using the same 
standardized input data. This standard also specifies the equations for 
computing correction factors, including the calculation sequence, 
discrimination levels, and rules for rounding to be employed in the 
calculations.
     API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 4--
Calculation of Base Prover Volumes by the Waterdraw Method; First 
Edition, December 1997; Errata July 2009; Reaffirmed September 2014 
(``API 12.2.4''). This standard provides standardized calculation 
methods for the quantification of liquids and determination of base 
prover volumes under defined conditions. The criteria contained in this 
standard allows individuals, using various computer languages on 
different computer hardware (or manual calculations), to arrive at 
identical results using the same standardized input data. This standard 
specifies the equations for computing correction factors, rules for 
rounding, the sequence of the calculations, and the discrimination 
levels of all numbers to be used in these calculations.
     API MPMS Chapter 13.3, Measurement Uncertainty; Second 
Edition, December 2017 (``API 13.3''). This standard establishes a 
methodology for developing an uncertainty analysis.
     API MPMS Chapter 14, Section 3, Orifice Metering of 
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 1, General Equations and Uncertainty 
Guidelines; Fourth Edition, September 2012; Errata July 2013; 
Reaffirmed, September 2017 (``API 14.3.1''). This standard provides 
reference for engineering equations and uncertainty estimations.
     API MPMS Chapter 18--Custody Transfer, Section 1--
Measurement Procedures for Crude Oil Gathered from Lease Tanks by 
Truck; Third Edition, May 2018 (``API 18.1''). This standard describes 
the procedures, organized into a recommended sequence of steps, for 
manually determining the quantity and quality of crude oil being 
transferred under field conditions.
     API MPMS Chapter 21--Flow Measurement Using Electronic 
Metering Systems, Section 2--Electronic Liquid Volume Measurement Using 
Positive Displacement and Turbine Meters; First Edition, June 1998; 
Reaffirmed October 2016 (``API 21.2''). This standard provides for the 
effective utilization of electronic liquid measurement systems for 
custody-transfer measurement of liquid hydrocarbons.
     API Recommended Practice (RP) 12R1, Setting, Maintenance, 
Inspection, Operation and Repair of Tanks in Production Service; Fifth 
Edition, August 1997; Reaffirmed April 2008; Addendum 1, December 2017 
(``API RP 12R1''). This recommended practice is a guide on new tank 
installations and the maintenance of existing tanks. Specific 
provisions from this recommended practice are identified as 
requirements.
     API RP 2556, Correction Gauge Tables for Incrustation; 
Second Edition, August 1993; Reaffirmed November 2013 (``API RP 
2556''). This recommended practice provides for correcting gauge tables 
for incrustation applied to tank capacity tables. The tables in this 
recommended practice show the percent of error of measurement caused by 
varying thicknesses of uniform incrustation in tanks of various sizes.
    The following industry standards and recommendations are proposed 
for incorporation by reference, in whole or in part, in subpart K of 
the proposed rule:
     API MPMS Chapter 14--Natural Gas Fluids Measurement, 
Section 1--Collecting and Handling of Natural Gas Samples for Custody 
Transfer; Seventh Edition, May 2016; Addendum, August 2017; Errata, 
August 2017 (``API 14.1''). This standard provides comprehensive 
guidelines for properly collecting, conditioning, and handling 
representative samples of natural gas that are at or above their 
hydrocarbon dew point.
     API MPMS, Chapter 14, Section 3, Orifice Metering of 
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 1, General Equations and Uncertainty 
Guidelines; Fourth Edition,

[[Page 2435]]

September 2012; Errata, July 2013 (``API 14.3.1''). This standard 
provides engineering equations and uncertainty estimations for the 
calculation of flow rate through concentric, square-edge, flange-tapped 
orifice meters.
     API MPMS Chapter 14, Section 3, Orifice Metering of 
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 2, Specification and Installation 
Requirements; Fifth Edition, March 2016; Errata 1, March 2017; Errata 
2, January 2019) (``API 14.3.2''). This standard provides construction 
and installation requirements, and standardized implementation 
recommendations, for the calculation of flow rate through concentric, 
square-edge, flange-tapped orifice meters.
     API MPMS Chapter 14, Section 3, Orifice Metering of 
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 3, Natural Gas Applications; Fourth Edition, 
November 2013 (``API 14.3.3''). This standard is an application guide 
for the calculation of natural gas flow through a flange-tapped, 
concentric orifice meter.
     API MPMS, Chapter 14.5, Calculation of Gross Heating 
Value, Relative Density, Compressibility and Theoretical Hydrocarbon 
Liquid Content for Natural Gas Mixtures for Custody Transfer; Third 
Edition, January 2009; Reaffirmed November 2020 (``API 14.5''). This 
standard presents procedures for calculating the following properties 
of natural gas mixtures at base conditions from composition: gross 
heating value, relative density (real and ideal), compressibility 
factor, and theoretical hydrocarbon liquid content.
     API MPMS Chapter 21.1, Flow Measurement Using Electronic 
Metering Systems--Electronic Gas Measurement; Second Edition, February 
2013 (``API 21.1''). This standard describes the minimum specifications 
for electronic gas measurement systems (EGMs) used in the measurement 
and recording of flow parameters of gaseous phase hydrocarbon and other 
related fluids for custody transfer applications utilizing industry 
recognized primary measurement devices.
     AGA Report No. 3, Orifice Metering of Natural Gas and 
Other Related Hydrocarbon Fluids; Second Edition, September 1985 (``AGA 
Report No. 3''). This report provides construction and installation 
requirements, and standardized implementation recommendations, for the 
calculation of flow rate through concentric, square-edged, flange-
tapped orifice meters.
     AGA Transmission Measurement Committee Report No. 8, 
Compressibility Factors of Natural Gas and Other Related Hydrocarbon 
Gases; Second Edition, November 1992 (``AGA Report No. 8''). This 
report presents detailed information for precise computations of 
compressibility factors and densities of natural gas and other 
hydrocarbon gases, calculation uncertainty estimations, and FORTRAN 
computer program listings.
     GPA Midstream Standard 2166-17, Obtaining Natural Gas 
Samples for Analysis by Gas Chromatography, Reaffirmed 2017 (``GPA 
2166-17''). This standard recommends procedures for obtaining samples 
from flowing natural gas streams that represent the compositions of the 
vapor phase portion of the system being analyzed.
     GPA Standard Midstream 2261-19, Analysis for Natural Gas 
and Similar Gaseous Mixtures by Gas Chromatography; Revised 2019 (``GPA 
2261-19''). This standard establishes a method to determine the 
chemical composition of natural gas and similar gaseous mixtures within 
set ranges using a gas chromatograph (CG).
     GPA Midstream Standard 2198-16, Selection, Preparation, 
Validation, Care and Storage of Natural Gas and Natural Gas Liquids 
Reference Standard Blends; Revised 2016 (``GPA 2198-16''). This 
standard establishes procedures for selecting the proper natural gas 
and natural gas liquids reference standards, preparing the reference 
standards for use, verifying the accuracy of composition as reported by 
the manufacturer, and the proper care and storage of those reference 
standards to ensure their integrity while they are in use.

V. Discussion of Proposed Changes

    This proposed rule adds new sections and redesignates or revises 
current sections as set forth in the table below. The proposed rule 
removes all references to the ``Osage Tribal Council,'' and replaces 
them with ``Osage Nation'' or ``Osage Minerals Council,'' as 
applicable, because the Osage Tribal Council ceased to exist upon 
ratification of the Constitution of the Osage Nation in 2006.

----------------------------------------------------------------------------------------------------------------
               New section                      Current section                     Proposed changes
----------------------------------------------------------------------------------------------------------------
226.0...................................  N/A........................  The proposed rule identifies the API
                                                                        standards incorporated by reference in
                                                                        subpart J, Oil Measurement, and the API,
                                                                        AGA, and GPA standards incorporated by
                                                                        reference in subpart K, Gas Measurement.
226.1...................................  226.1......................  The proposed rule defines new key terms,
                                                                        updates existing definitions, and
                                                                        removes definitions of terms that are no
                                                                        longer used in the regulations.
226.2 (new).............................  N/A........................  The proposed rule identifies the legal
                                                                        authorities that govern oil and gas
                                                                        leasing and development activities
                                                                        within the Osage Mineral Estate.
226.3 (new).............................  N/A........................  The proposed rule describes the
                                                                        Superintendent's authority and
                                                                        responsibility to administer oil and gas
                                                                        leasing and development of the Osage
                                                                        Mineral Estate.
226.4 (new).............................  N/A........................  The proposed rule describes ONRR's
                                                                        authority and responsibility to
                                                                        administer the Osage royalty management
                                                                        program.
226.5...................................  226.45.....................  The proposed rule clarifies the
                                                                        Superintendent's authority to issue
                                                                        orders and notices and adds a provision
                                                                        specifying ONRR's authority to issue
                                                                        orders and notices.
226.6...................................  226.31.....................  The proposed rule removes the provision
                                                                        requiring lessees who reside outside the
                                                                        state of Oklahoma to designate in-state
                                                                        process agents for the purpose of
                                                                        serving notice. The proposed rule also
                                                                        removes the provision providing for the
                                                                        Superintendent to serve notice on
                                                                        employees present on the lease if the
                                                                        designated process agent is
                                                                        incapacitated or absent from the state
                                                                        of Oklahoma. The proposed rule adds
                                                                        provisions setting forth the procedures
                                                                        the Superintendent and ONRR will use to
                                                                        serve official correspondence.
226.7...................................  226.7......................  No substantive change.
226.8...................................  226.4......................  The proposed rule removes the language
                                                                        allowing cash payments and updates the
                                                                        accepted forms of payment to include
                                                                        electronic funds transfer (EFT),
                                                                        certified check, cashier's check, money
                                                                        order, or commercial or personal check
                                                                        drawn on a solvent bank.

[[Page 2436]]

 
226.9...................................  226.2(c)...................  The proposed rule clarifies the
                                                                        Superintendent's obligations to conduct
                                                                        environmental reviews and cultural
                                                                        surveys prior to approving leases and
                                                                        operations involving new or additional
                                                                        ground-disturbance.
226.10..................................  226.46.....................  The proposed rule updates this section to
                                                                        reflect amendments to the Paperwork
                                                                        Reduction Act promulgated after the
                                                                        section was last revised requiring the
                                                                        BIA to obtain OMB approval for the
                                                                        information collections in 25 CFR part
                                                                        226. The proposed rule also adds
                                                                        language identifying the applicable OMB
                                                                        Control Numbers.
226.11 (new)............................  N/A........................  The proposed rule informs submitters of
                                                                        information that the BIA and ONRR will
                                                                        make records available to the public
                                                                        without prior notification, subject to
                                                                        exceptions for trade secrets,
                                                                        confidential commercial or financial
                                                                        information, and information protected
                                                                        by the Privacy Act.
226.12..................................  226.2(f)...................  The proposed rule clarifies that the OMC
                                                                        must submit requests for the
                                                                        Superintendent to negotiate leases in
                                                                        writing and provide a resolution
                                                                        authorizing such negotiation. This
                                                                        change reflects the BIA's and OMC's
                                                                        existing practices for the submission of
                                                                        leasing requests.
226.13..................................  226.2(f)...................  The proposed rule clarifies that the OMC
                                                                        must submit requests for the
                                                                        Superintendent to advertise lease sales
                                                                        in writing and provide a resolution
                                                                        authorizing such advertising. This
                                                                        change reflects the BIA's and OMC's
                                                                        existing practices for the submission of
                                                                        lease sale requests.
226.14..................................  226.2(a)...................  The proposed rule removes the nomination
                                                                        fee for lease sales and clarifies the
                                                                        content and submission requirements for
                                                                        lease sale nominations. These
                                                                        clarifications reflect the BIA's
                                                                        existing requirements for lease sale
                                                                        nominations.
226.15..................................  226.2(b)...................  The proposed rule specifies that the
                                                                        Superintendent will publish the Notice
                                                                        of Lease Sale at least 30 calendar days
                                                                        prior to the date of the sale. This
                                                                        change reflects the BIA's and OMC's
                                                                        existing practices for publishing such
                                                                        notices.
226.16..................................  226.2(b), 226.6(a).........  The proposed rule specifies that
                                                                        successful bidders must submit 25
                                                                        percent of the bonus by 4:30 p.m.
                                                                        central standard time on the day of the
                                                                        sale. The proposed rule also removes the
                                                                        language allowing cash payments and
                                                                        updates the accepted forms of payment to
                                                                        electronic funds transfer (EFT),
                                                                        cashier's check, or money order.
226.17..................................  226.2(b)...................  No substantive change.
226.18..................................  226.2(f)...................  The proposed rule specifies what
                                                                        information offerors must include in non-
                                                                        competitive lease offers submitted to
                                                                        the OMC.
226.19..................................  226.6(a)...................  The proposed rule requires successful
                                                                        offerors of non-competitive leases to
                                                                        submit the bonus and required
                                                                        documentation to the Superintendent
                                                                        within 20 calendar days of the OMC's
                                                                        acceptance of the offer. This change
                                                                        reflects the BIA's and OMC's existing
                                                                        requirements for non-competitive leases
                                                                        and is consistent with the requirements
                                                                        for competitive leases in the new Sec.
                                                                        226.16.
226.20..................................  226.2(d)...................  The proposed rule removes oil-only and
                                                                        gas-only leases and requires all leases
                                                                        executed after the effective date of the
                                                                        final rule to be combination oil and gas
                                                                        leases.
226.21..................................  226.9(b), 226.10...........  The proposed rule combines the
                                                                        regulations regarding extension of the
                                                                        primary term and the term of the lease
                                                                        into one section. The proposed rule
                                                                        specifies the actions that constitute
                                                                        ``actual drilling operations'' for
                                                                        purposes of obtaining an extension of
                                                                        the primary term.
226.22..................................  226.5......................  No substantive change.
226.23..................................  226.2(e)...................  The proposed rule clarifies the
                                                                        prohibition on U.S. Government employees
                                                                        acquiring interests in leases of the
                                                                        Osage Mineral Estate.
226.24..................................  226.15(a)..................  The proposed rule specifies that lessees
                                                                        must submit cooperative agreements to
                                                                        the Superintendent for approval at least
                                                                        90 calendar days prior to expiration of
                                                                        the leases covered by the agreements.
226.25..................................  226.15(a)..................  No substantive change.
226.26..................................  226.15(b)..................  No substantive change.
226.27..................................  226.15(b)..................  No substantive change.
226.28 (new)............................  N/A........................  The proposed rule specifies the effective
                                                                        date of the transfer for lease
                                                                        assignments.
226.29 (new)............................  N/A........................  The proposed rule specifies that
                                                                        assignors are liable for lease
                                                                        obligations and compliance issues that
                                                                        accrue prior to approval of the
                                                                        assignment.
226.30 (new)............................  N/A........................  The proposed rule specifies that
                                                                        assignees are liable for lease
                                                                        obligations and compliance issues that
                                                                        accrue after approval of the assignment.
226.31..................................  226.15(c)..................  No substantive change.
226.32..................................  226.15(d)..................  The proposed rule removes the provision
                                                                        authorizing the Superintendent to
                                                                        approve drilling contracts because it is
                                                                        contrary to law and clarifies that
                                                                        lessees are simply required to file
                                                                        copies of drilling contracts with the
                                                                        Superintendent.
226.33..................................  226.3......................  No substantive change.
226.34..................................  226.9(a), 226.29(a)........  The proposed rule combines the
                                                                        regulations regarding lease termination
                                                                        and lessees' obligations upon
                                                                        termination into one section. The
                                                                        proposed rule adds a provision
                                                                        specifying that leases in the extended
                                                                        term terminate by operation of law as of
                                                                        the date production in paying quantities
                                                                        ceases. The provision regarding
                                                                        termination in the extended term
                                                                        reflects the BIA's existing practices.
226.35..................................  226.9(a)...................  The proposed rule increases the rental
                                                                        rate for leases approved after the
                                                                        effective date of the final rule. The
                                                                        proposed rule also requires lessees to
                                                                        pay advance annual rental for the full
                                                                        primary term within 15 calendar days of
                                                                        the Superintendent's approval of the
                                                                        lease.

[[Page 2437]]

 
226.36..................................  226.11(a)(1)...............  The proposed rule removes the language
                                                                        requiring a royalty rate of not less
                                                                        than 20 percent when the quantity of oil
                                                                        from all wells in a quarter-section or
                                                                        fraction thereof during any calendar
                                                                        month averages 100 bbl or greater per
                                                                        well, per day. The proposed rule adds
                                                                        language authorizing the Superintendent
                                                                        to approve an oil royalty rate that is
                                                                        below the minimum royalty rate in the
                                                                        regulations if it is determined to be in
                                                                        the best interest of the Osage Nation.
226.37..................................  226.11(a)(2)...............  The proposed rule requires the value of
                                                                        oil to be calculated using the NYMEX
                                                                        Calendar Month Average Price of oil at
                                                                        Cushing, Oklahoma instead of the highest
                                                                        posted price by a major purchaser in
                                                                        Osage County, Oklahoma.
226.38 (new)............................  N/A........................  The proposed rule specifies how to
                                                                        calculate the gravity adjustment of the
                                                                        NYMEX Calendar Month Average Price of
                                                                        oil.
226.39..................................  226.11(b)..................  The proposed rule adds language
                                                                        authorizing the Superintendent to
                                                                        approve a gas royalty rate that is below
                                                                        the minimum royalty rate in the
                                                                        regulations if it is determined to be in
                                                                        the best interest of the Osage Nation.
226.40..................................  226.11(b)..................  The proposed rule requires the value of
                                                                        gas to be calculated using the ONRR
                                                                        Monthly Index Zone Price for Oklahoma
                                                                        Zone 1 instead of the market value of
                                                                        the gas and products extracted
                                                                        therefrom.
226.41..................................  226.11(c)..................  The proposed rule requires lessees to
                                                                        submit minimum royalty payments to ONRR
                                                                        instead of the Superintendent.
226.42..................................  226.11(a)(3)...............  The proposed rule revises the royalty-in-
                                                                        kind provision to allow the OMC to take
                                                                        both oil and gas royalty-in-kind and
                                                                        adds a provision setting forth notice
                                                                        requirements for the OMC initiating and
                                                                        terminating royalty-in-kind status.
226.43..................................  226.13(a) and (c)..........  The proposed rule requires lessees and
                                                                        purchasers to submit royalty payments to
                                                                        ONRR instead of the Superintendent and
                                                                        establishes a new due date for royalty
                                                                        payments. The proposed rule also adds a
                                                                        provision specifying the procedure for
                                                                        payors to recoup overpayments.
226.44..................................  226.14.....................  The proposed rule removes the language
                                                                        requiring the Superintendent's approval
                                                                        of royalty payment contracts and
                                                                        division orders and clarifies that
                                                                        lessees are simply required to file such
                                                                        contracts and division orders with the
                                                                        Superintendent prior to removing
                                                                        production from the lease.
226.45..................................  226.13(b)..................  The proposed rule requires lessees to
                                                                        submit royalty reports to ONRR
                                                                        electronically, subject to certain
                                                                        exceptions, and establishes a new due
                                                                        date for reporting.
226.46..................................  226.30.....................  The proposed rule requires lessees to
                                                                        retain rental, royalty, and payment
                                                                        records for a minimum of six years
                                                                        unless the Superintendent or ONRR direct
                                                                        otherwise. The proposed rule also adds a
                                                                        provision requiring lessees to make such
                                                                        records available to ONRR upon request.
226.47..................................  226.12.....................  The proposed rule updates this section by
                                                                        requiring the U.S. Government to
                                                                        purchase oil produced from the Osage
                                                                        Mineral Estate at the price set forth in
                                                                        Sec.   226.37.
226.48 (new)............................  N/A........................  The proposed rule authorizes ONRR to
                                                                        conduct audits and reviews of compliance
                                                                        with rental, royalty, and other payment
                                                                        and reporting requirements.
226.49 (new)............................  N/A........................  The proposed rule exempts existing lease
                                                                        (quarter-section) and collective bonds
                                                                        from certain changes to the bonding
                                                                        requirements.
226.50..................................  226.6......................  The proposed rule adds a provision
                                                                        identifying the accepted types of
                                                                        performance bonds.
226.51..................................  226.6(a) and (c)...........  The proposed rule replaces the $5,000
                                                                        lease bond for each quarter-section or
                                                                        fraction thereof covered by the lease
                                                                        with an individual well bond of $6 per
                                                                        foot of measured or projected well
                                                                        depth.
226.52..................................  226.6(a) and (b)...........  The proposed rule combines the collective
                                                                        and nationwide bond provisions into one
                                                                        section. The proposed rule changes the
                                                                        collective bond (covering all leases up
                                                                        to 10,240 acres) to a countywide bond
                                                                        covering only those operations in Osage
                                                                        County up to 10,240 acres and increases
                                                                        the bond amount from $50,000 to $75,000.
226.53..................................  226.6(d)...................  The proposed rule clarifies the
                                                                        conditions that justify the
                                                                        Superintendent increasing the required
                                                                        bond amount and adds a provision placing
                                                                        a limit on the amount of any such
                                                                        increase.
226.54 (new)............................  N/A........................  The proposed rule specifies that the
                                                                        Superintendent has authority to call for
                                                                        the forfeiture of performance bonds and
                                                                        clarifies lessees' obligations upon
                                                                        default. This change reflects the
                                                                        Superintendent's existing authority, as
                                                                        all bonds are payable to the
                                                                        Superintendent. The proposed rule adds a
                                                                        provision specifying that the United
                                                                        States or OMC may take action to recover
                                                                        from lessees all costs in excess of the
                                                                        amount collected under the bond if an
                                                                        obligation in default exceeds the face
                                                                        amount of the bond.
226.55 (new)............................  N/A........................  The proposed rule specifies that the
                                                                        period of liability under a performance
                                                                        bond will not terminate, and the bond
                                                                        will not be released, until all lease
                                                                        obligations have been satisfied. This
                                                                        reflects the BIA's existing practices
                                                                        for the release of bonds.
226.56 (new)............................  N/A........................  The proposed rule requires bonding for
                                                                        geophysical exploration activities,
                                                                        subject to certain exceptions for
                                                                        existing lessees.
226.57 (new)............................  N/A........................  The proposed rule specifies that the
                                                                        Superintendent has authority to call for
                                                                        the forfeiture of geophysical
                                                                        exploration bonds. This is consistent
                                                                        with the Superintendent's authority for
                                                                        performance bonds for all other oil and
                                                                        gas operations within the Osage Mineral
                                                                        Estate.

[[Page 2438]]

 
226.58 (new)............................  N/A........................  The proposed rule specifies that the
                                                                        period of liability under a geophysical
                                                                        exploration bond will not terminate, and
                                                                        the bond will not be released, until all
                                                                        permit obligations have been satisfied.
                                                                        This is consistent with the BIA's
                                                                        existing practices for the release of
                                                                        performance bonds for all other oil and
                                                                        gas operations within the Osage Mineral
                                                                        Estate.
226.59..................................  226.19(a)..................  The proposed rule adds a provision
                                                                        requiring lessees and permittees to
                                                                        properly maintain installations and
                                                                        equipment and comply with the National
                                                                        Electrical Code.
226.60..................................  226.30.....................  The proposed rule clarifies the
                                                                        Superintendent's authority to inspect
                                                                        and investigate operations.
226.61..................................  226.16(a)..................  The proposed rule clarifies the language
                                                                        regarding the commencement of
                                                                        operations, expressly stating that
                                                                        operations may not commence until the
                                                                        Superintendent approves a lease or
                                                                        geophysical exploration permit, as
                                                                        applicable.
226.62..................................  226.17.....................  No substantive change.
226.63..................................  226.18.....................  The proposed rule adds a provision
                                                                        requiring lessees and permittees to send
                                                                        meeting requests to surface owners by
                                                                        certified mail. The proposed rule also
                                                                        adds a provision authorizing the
                                                                        Superintendent to approve the
                                                                        commencement of operations if a meeting
                                                                        request cannot be delivered to the
                                                                        surface owner's last known address or
                                                                        the surface owner fails to accept the
                                                                        request within 30 calendar days of
                                                                        receiving it.
226.64..................................  226.19(b) through (d)......  The proposed rule combines the
                                                                        regulations regarding commencement money
                                                                        for operations and tank siting fees into
                                                                        one section. The proposed rule increases
                                                                        the amount of commencement money for
                                                                        drilling and reentering wells and siting
                                                                        tanks and adds a provision requiring
                                                                        lessees and permittees to pay
                                                                        commencement money for the acreage
                                                                        occupied during seismic surveys using
                                                                        vibroseis. The proposed rule also adds a
                                                                        provision stating that commencement
                                                                        money that cannot be delivered to the
                                                                        surface owner's last known address or
                                                                        that the surface owner refuses is deemed
                                                                        forfeited.
226.65..................................  226.19(a), 226.24..........  The proposed rule combines the
                                                                        regulations regarding the use of surface
                                                                        lands and water into one section. No
                                                                        substantive changes.
226.66..................................  226.16(b)(1) and (c);        The proposed rule combines the
                                           226.33.                      regulations regarding drilling
                                                                        operations and line drilling
                                                                        requirements into one section. The
                                                                        proposed rule specifies that lessees
                                                                        must provide the Superintendent with
                                                                        five calendar days' notice of drilling
                                                                        operations. The proposed rule adds a
                                                                        line drilling requirement imposing a
                                                                        setback from certain water sources. This
                                                                        setback is consistent with the BIA's
                                                                        existing permit conditions under the
                                                                        Osage County Oil and Gas Final
                                                                        Environmental Impact Statement (2020).
226.67..................................  226.36.....................  The proposed rule requires lessees to
                                                                        obtain the Superintendent's prior
                                                                        approval to drill wells that deviate
                                                                        significantly from the vertical and
                                                                        conduct directional surveys if deviation
                                                                        occurs without prior approval.
226.68..................................  226.40.....................  No substantive change.
226.69..................................  226.16(b)(1) and (2), (c);.  The proposed rule specifies that lessees
                                                                        must provide the Superintendent with at
                                                                        least five calendar days' notice of
                                                                        workover operations. The proposed rule
                                                                        adds a provision clarifying that prior
                                                                        approval and a subsequent report of
                                                                        operations are not required for certain
                                                                        well maintenance activities. This change
                                                                        reflects the BIA's existing practices
                                                                        with respect to well maintenance
                                                                        activities.
226.70 (new)............................  N/A........................  The proposed rule establishes testing,
                                                                        training, operational, and safety
                                                                        requirements for drilling and workover
                                                                        operations in Hydrogen Sulfide (H2S)
                                                                        areas.
226.71..................................  226.32(b), (d).............  The proposed rule adds a provision
                                                                        requiring lessees to conduct reasonable
                                                                        tests of the mechanical integrity of
                                                                        downhole equipment.
226.72..................................  226.28(a)..................  The proposed rule clarifies the language
                                                                        regarding temporary abandonment, more
                                                                        clearly stating that lessees must obtain
                                                                        the Superintendent's approval to
                                                                        temporarily abandon a well for more than
                                                                        30 calendar days.
226.73..................................  226.28(a) and (b);           The proposed rule combines the
                                           226.29(c) and (d).           regulations regarding permanent
                                                                        abandonment and plugging obligations
                                                                        into one section. The proposed rule
                                                                        removes the plugging application fee and
                                                                        requirement that oil-only and gas-only
                                                                        lessees offer wells to one another prior
                                                                        to abandonment. The proposed rule
                                                                        specifies that lessees must provide the
                                                                        Superintendent with five calendar days'
                                                                        notice of plugging operations.
226.74..................................  226.32(a), (c), and (e)....  The proposed rule requires lessees to
                                                                        submit certain information together with
                                                                        the subsequent report of hydraulic
                                                                        fracturing operations and adds a
                                                                        provision specifying the procedure for
                                                                        lessees to withhold confidential
                                                                        information regarding such operations.
                                                                        The proposed rule also clarifies that
                                                                        lessees must retain well records and
                                                                        reports for a minimum of six years
                                                                        unless the Superintendent directs
                                                                        otherwise.
226.75..................................  226.34.....................  The proposed rule adds a provision
                                                                        requiring lessees to mark wells that are
                                                                        permanently plugged and abandoned.
226.76..................................  226.22(a), 226.35..........  The proposed rule combines the
                                                                        regulations regarding the prevention of
                                                                        pollution and protection of formations
                                                                        into one section. The proposed rule
                                                                        specifies that lessees and permittees
                                                                        must conduct surveys and tests of the
                                                                        measures taken to protect fresh water
                                                                        and mineral bearing formations and
                                                                        provide the results to the
                                                                        Superintendent upon request.

[[Page 2439]]

 
226.77..................................  226.22(b) through (e)......  The proposed rule adds provisions
                                                                        prohibiting lessees from constructing
                                                                        pits in certain sensitive locations
                                                                        consistent with the BIA's existing
                                                                        permit conditions under the Osage County
                                                                        Oil and Gas Final Environmental Impact
                                                                        Statement (2020). The proposed rule also
                                                                        adds a provision requiring the
                                                                        Superintendent's prior approval for the
                                                                        land application of drilling fluids.
226.78 (new)............................  N/A........................  The proposed rule requires lessees to
                                                                        remove fire hazards from well sites and
                                                                        facilities and safely dispose of waste
                                                                        oil. These requirements are consistent
                                                                        with the BIA's existing permit
                                                                        conditions under the Osage County Oil
                                                                        and Gas Final Environmental Impact
                                                                        Statement (2020).
226.79 (new)............................  N/A........................  The proposed rule requires a geophysical
                                                                        exploration permit to conduct
                                                                        geophysical exploration operations on
                                                                        both leased and unleased lands.
226.80 (new)............................  N/A........................  The proposed rule specifies that lessees
                                                                        and permittees must provide the
                                                                        Superintendent with five calendar days'
                                                                        notice of geophysical exploration
                                                                        operations.
226.81 (new)............................  N/A........................  The proposed rule requires lessees and
                                                                        permittees to submit subsequent reports
                                                                        of geophysical exploration operations to
                                                                        the Superintendent.
226.82..................................  226.20.....................  No substantive change.
226.83..................................  226.21.....................  No substantive change.
226.84..................................  226.9(a)...................  The proposed rule specifies that lessees
                                                                        must place oil and gas into marketable
                                                                        condition at no cost to the lessor. This
                                                                        change is consistent with current
                                                                        industry practices within the Osage
                                                                        Mineral Estate.
226.85..................................  226.13(b)..................  The proposed rule requires lessees to
                                                                        submit production reports to ONRR
                                                                        electronically, subject to certain
                                                                        exceptions, and establishes a new due
                                                                        date for production reports.
226.86 (new)............................  N/A........................  The proposed rule requires lessees to
                                                                        submit site facility diagrams to the
                                                                        Superintendent and specifies the format
                                                                        and content of such diagrams.
226.87 (new)............................  N/A........................  The proposed rule requires lessees to use
                                                                        FMP numbers when reporting production to
                                                                        ONRR.
226.88 (new)............................  N/A........................  The proposed rule specifies what
                                                                        information production records must
                                                                        contain and requires lessees to maintain
                                                                        such records for a minimum of six years
                                                                        unless the Superintendent or ONRR direct
                                                                        otherwise. The proposed rule also
                                                                        requires lessees, purchasers, and
                                                                        transporters to provide production
                                                                        records to ONRR upon request.
226.89..................................  226.23.....................  No substantive change.
226.90..................................  226.37.....................  No substantive change.
226.91 (new)............................  N/A........................  The proposed rule requires lessees to pay
                                                                        compensatory royalty for avoidably lost
                                                                        or wasted production. This change
                                                                        reflects the BIA's existing requirement
                                                                        to pay royalty for lost and wasted
                                                                        production. The proposed rule specifies
                                                                        when production is considered avoidably
                                                                        and unavoidably lost or wasted.
226.92 (new)............................  N/A........................  The proposed rule sets forth lessees'
                                                                        responsibilities for protecting oil and
                                                                        gas resources from drainage.
226.93 (new)............................  N/A........................  The proposed rule requires lessees to pay
                                                                        compensatory royalty for drainage if
                                                                        protective action is not taken within a
                                                                        reasonable time and specifies how
                                                                        compensatory royalty will be calculated.
226.94 (new)............................  N/A........................  The proposed rule requires the use of
                                                                        seals on appropriate valves at oil
                                                                        storage and sales facilities and
                                                                        prohibits tampering with such valves.
226.95 (new)............................  N/A........................  The proposed rule requires the use of
                                                                        seals on oil measurement system
                                                                        components.
226.96 (new)............................  N/A........................  The proposed rule requires transporters
                                                                        removing oil from storage tanks to
                                                                        possess run tickets, trip logs, and
                                                                        manifests.
226.97 (new)............................  N/A........................  The proposed rule requires any person
                                                                        transporting oil or gas to possess
                                                                        documentation indicating the first
                                                                        purchaser and authorizes the
                                                                        Superintendent and law enforcement to
                                                                        conduct vehicle inspections.
226.98 (new)............................  N/A........................  The proposed rule requires lessees,
                                                                        purchasers, and transporters to record
                                                                        certain information when water is
                                                                        drained from tanks holding oil.
226.99 (new)............................  N/A........................  The proposed rule requires lessees to
                                                                        record certain information when oil is
                                                                        removed from storage and used on the
                                                                        lease or unit for hot oiling, clean up,
                                                                        and completion operations. The proposed
                                                                        rule also requires lessees to report all
                                                                        production removed from storage and used
                                                                        on a different lease to ONRR.
226.100 (new)...........................  N/A........................  The proposed rule specifies the records
                                                                        that lessees must maintain for each
                                                                        seal.
226.101 (new)...........................  N/A........................  The proposed rule requires lessees to
                                                                        obtain the Superintendent's approval for
                                                                        off-lease measurement of production.
226.102.................................  226.41.....................  The proposed rule specifies that lessees
                                                                        must report spills, thefts, mishandling
                                                                        of production, accidents, and fires to
                                                                        both the Superintendent and surface
                                                                        owners immediately upon discovery and
                                                                        requires lessees to submit incident
                                                                        reports with proposed contingency or
                                                                        remediation plans to the Superintendent.
                                                                        This change reflects the BIA's current
                                                                        requirements for reporting of such
                                                                        incidents. The proposed rule adds a
                                                                        provision requiring lessees to provide
                                                                        surface owners with both emergency and
                                                                        written notification of such incidents.
226.103 (new)...........................  N/A........................  The proposed rule prohibits bypasses of
                                                                        meters and tampering with oil
                                                                        measurement devices, the components of
                                                                        such devices, and the measurement
                                                                        process and imposes the maximum penalty
                                                                        for such violations.
226.104 (new)...........................  N/A........................  The proposed rule establishes the
                                                                        timeframe for complying with the new
                                                                        requirements for oil measurement
                                                                        equipment and procedures.
226.105.................................  N/A........................  [Reserved]

[[Page 2440]]

 
226.106 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for oil volume uncertainty
                                                                        levels, measurement bias, and equipment
                                                                        verification.
226.107.................................  226.38.....................  The proposed rule specifies that tank
                                                                        gauging may be used to measure oil and
                                                                        updates requirements for the use and
                                                                        calibration of oil storage tanks.
226.108.................................  226.38.....................  The proposed rule specifies the required
                                                                        tank gauging procedures.
226.109.................................  226.38.....................  The proposed rule specifies that Lease
                                                                        Automatic Custody Transfer (LACT)
                                                                        systems may be used to measure oil and
                                                                        sets forth general requirements for LACT
                                                                        systems.
226.110.................................  226.38.....................  The proposed rule identifies required
                                                                        LACT system equipment and sets forth
                                                                        standards for operating LACT system
                                                                        components.
226.111.................................  226.38.....................  The proposed rule specifies that Coriolis
                                                                        Measurement Systems (CMS) may be used to
                                                                        measure oil and sets forth general
                                                                        requirements for CMS and CMS components.
226.112.................................  226.38.....................  The proposed rule establishes Coriolis
                                                                        meter operating requirements.
226.113 (new)...........................  N/A........................  The proposed rule sets forth requirements
                                                                        for volumetric meter proving.
226.114 (new)...........................  N/A........................  The proposed rule requires the completion
                                                                        and submission of run tickets for tank
                                                                        gauging, LACT systems, and CMS. This
                                                                        change codifies the BIA's existing
                                                                        requirements with respect to run
                                                                        tickets.
226.115.................................  226.38.....................  The proposed rule specifies that the
                                                                        Superintendent's approval is required to
                                                                        use methods of oil measurement other
                                                                        than tank gauging, LACT system, or CMS.
226.116 (new)...........................  N/A........................  The proposed rule prohibits the sale and
                                                                        disposal of waste oil without the
                                                                        Superintendent's approval. This change
                                                                        codifies the BIA's existing requirement.
226.117 (new)...........................  N/A........................  The proposed rule prohibits bypasses of
                                                                        meters. The proposed rule also prohibits
                                                                        tampering with any measurement device,
                                                                        component of a measurement device, or
                                                                        the measurement process. The proposed
                                                                        rule imposes the maximum penalty for
                                                                        such violations.
226.118 (new)...........................  N/A........................  The proposed rule establishes the
                                                                        timeframe for complying with the new
                                                                        requirements for gas measurement
                                                                        equipment and procedures.
226.119.................................  N/A........................  [Reserved]
226.120 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for gas flow rate and
                                                                        heating value uncertainty, measurement
                                                                        bias, and equipment verification.
226.121.................................  226.39.....................  The proposed rule specifies the standards
                                                                        for orifice plates and meter tubes and
                                                                        sets forth inspection requirements.
226.122.................................  226.39.....................  The proposed rule establishes standards
                                                                        for the use of mechanical recorders.
226.123 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for the verification and
                                                                        calibration of mechanical recorders,
                                                                        correction of reported gas volumes, and
                                                                        certification of test equipment.
226.124 (new)...........................  N/A........................  The proposed rule specifies what
                                                                        information integration statements must
                                                                        contain and requires lessees to retain
                                                                        integration statements.
226.125.................................  226.39.....................  The proposed rule establishes standards
                                                                        for the use of electronic gas
                                                                        measurement (EGM) systems.
226.126 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for the verification and
                                                                        calibration of transducers, correction
                                                                        of reported gas volumes, and
                                                                        certification of test equipment.
226.127 (new)...........................  N/A........................  The proposed rule provides the gas flow
                                                                        rate, volume, and average value
                                                                        calculations.
226.128 (new)...........................  N/A........................  The proposed rule requires lessees to
                                                                        retain certain logs and records and make
                                                                        them available to the Superintendent
                                                                        upon request.
226.129 (new)...........................  N/A........................  The proposed rule specifies the methods
                                                                        of gas sampling and analysis that may be
                                                                        used.
226.130 (new)...........................  N/A........................  The proposed rule establishes standards
                                                                        for the location, design, and type of
                                                                        sampling probes and sample tubing size.
226.131 (new)...........................  N/A........................  The proposed rule establishes the general
                                                                        requirements for taking spot samples.
226.132 (new)...........................  N/A........................  The proposed rule specifies the methods
                                                                        of spot sampling that may be used.
226.133 (new)...........................  N/A........................  The proposed rule specifies the frequency
                                                                        with which lessees must take and analyze
                                                                        spot samples.
226.134 (new)...........................  N/A........................  The proposed rule establishes
                                                                        specifications for composite sampling
                                                                        methods.
226.135 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for the installation,
                                                                        operation, verification, and calibration
                                                                        of on-line gas chromatographs.
226.136 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for the installation,
                                                                        operation, verification, and calibration
                                                                        of gas chromatographs.
226.137 (new)...........................  N/A........................  The proposed rule identifies the
                                                                        components of gas that must be analyzed
                                                                        and the frequency with which component
                                                                        analysis must occur.
226.138 (new)...........................  N/A........................  The proposed rule specifies what
                                                                        information gas analysis reports must
                                                                        contain.
226.139 (new)...........................  N/A........................  The proposed rule specifies the effective
                                                                        date of a spot or composite gas sample.
226.140 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for calculating the heating
                                                                        value, average heating value, and volume
                                                                        of a gas sample.
226.141 (new)...........................  N/A........................  The proposed rule establishes
                                                                        requirements for reporting gross and
                                                                        real heating values and volumes.
226.142.................................  226.27(b)..................  The proposed rule updates the provision
                                                                        by requiring the Osage Nation and Tribal
                                                                        members to pay for gas at the price set
                                                                        forth in Sec.   226.40.
226.143.................................  226.27(b)..................  The proposed rule updates the provision
                                                                        by requiring the lessee to pay royalty
                                                                        on all gas furnished to the Osage Nation
                                                                        and Tribal members at the rate set forth
                                                                        in Sec.   226.39.

[[Page 2441]]

 
226.144.................................  226.11(a)(1) and (b)(2)....  No substantive change.
226.145 (new)...........................  N/A........................  The proposed rule identifies the uses of
                                                                        production on a lease or unit that do
                                                                        not require the Superintendent's prior
                                                                        approval for royalty-free treatment.
226.146 (new)...........................  N/A........................  The proposed rule identifies the uses of
                                                                        production on a lease or unit that
                                                                        require the Superintendent's prior
                                                                        approval for royalty-free treatment.
226.147 (new)...........................  N/A........................  The proposed rule identifies the uses of
                                                                        production off the lease or unit that do
                                                                        not require the Superintendent's prior
                                                                        approval of royalty-free treatment.
226.148 (new)...........................  N/A........................  The proposed rule identifies the uses of
                                                                        production off the lease or unit that
                                                                        require the Superintendent's prior
                                                                        approval of royalty-free treatment.
226.149 (new)...........................  N/A........................  The proposed rule sets forth requirements
                                                                        for the measurement and reporting of
                                                                        royalty-free volumes of oil and gas
                                                                        used.
226.150 (new)...........................  N/A........................  The proposed rule specifies that lessees
                                                                        do not need to own or lease the
                                                                        equipment or facility that uses royalty-
                                                                        free oil and gas.
226.151 (new)...........................  N/A........................  The proposed rule sets forth procedures
                                                                        for requesting royalty-free use of oil
                                                                        and gas.
226.152.................................  226.37.....................  The proposed rule adds a provision
                                                                        prohibiting the venting and flaring of
                                                                        gas without the Superintendent's prior
                                                                        approval. The proposed rule also
                                                                        requires all flares and combustible
                                                                        devices to be equipped with an automatic
                                                                        ignition system. This reflects the BIA's
                                                                        existing requirements for venting and
                                                                        flaring and is consistent with the BIA's
                                                                        existing permit conditions under the
                                                                        Osage County Oil and Gas Final
                                                                        Environmental Impact Statement (2020).
226.153 (new)...........................  N/A........................  The proposed rule adds a provision
                                                                        prohibiting the venting and flaring of
                                                                        gas-well gas unless it is unavoidably
                                                                        lost.
226.154 (new)...........................  N/A........................  The proposed rule authorizes the venting
                                                                        and flaring of oil-well gas in
                                                                        accordance with Sec.  Sec.   226.155,
                                                                        226.156, and 226.157.
226.155 (new)...........................  N/A........................  The proposed rule requires gas to be
                                                                        flared, rather than vented, subject to
                                                                        certain exceptions.
226.156 (new)...........................  N/A........................  The proposed rule authorizes the venting
                                                                        and flaring of gas during certain tests,
                                                                        well maintenance activities, and
                                                                        emergencies.
226.157 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        requirements for measuring and reporting
                                                                        the volumes of gas vented and flared.
226.158.................................  226.42.....................  The proposed rule identifies the remedies
                                                                        the Superintendent may utilize to
                                                                        address violations of lease or permit
                                                                        terms and conditions, the regulations,
                                                                        and orders or notices.
226.159.................................  226.43.....................  The proposed rule updates the list of
                                                                        lease operation violations that will
                                                                        result in immediate assessments.
226.160 (new)...........................  N/A........................  The proposed rule authorizes the
                                                                        Superintendent to issue assessments if a
                                                                        lessee fails to commence or perform an
                                                                        operation within five calendar days of
                                                                        an order to do so if the Superintendent
                                                                        performs the operation or must retain a
                                                                        third-party to perform the operation.
226.161 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        procedure the Superintendent will use to
                                                                        notify lessees of lease violations that
                                                                        have a period to correct prior to the
                                                                        assessment of penalties and the penalty
                                                                        amounts imposed if violations are not
                                                                        timely corrected.
226.162 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        procedure the Superintendent will use to
                                                                        notify lessees of lease violations that
                                                                        do not have a period to correct prior to
                                                                        the assessment of penalties and the
                                                                        penalty amounts imposed for such
                                                                        violations.
226.163 (new)...........................  N/A........................  The proposed rule specifies the factors
                                                                        the Superintendent will consider in
                                                                        determining that amount of the penalty
                                                                        to assess.
226.164.................................  226.28(c)..................  The proposed rule clarifies the
                                                                        circumstances under which the
                                                                        Superintendent may take shut-in action.
226.165.................................  226.29(b); 226.42..........  The proposed rule specifies the
                                                                        circumstances under which the
                                                                        Superintendent may cancel a lease or
                                                                        permit and the procedure for cancelling
                                                                        a lease or permit.
226.166.................................  226.42.....................  The proposed rule specifies that interest
                                                                        on unpaid and underpaid civil penalties
                                                                        and assessments will be charged at the
                                                                        IRS underpayment rate or such other rate
                                                                        as the Superintendent may prescribe.
226.167 (new)...........................  N/A........................  The proposed rule identifies the remedies
                                                                        ONRR may utilize to address violations
                                                                        of lease or permit terms and conditions,
                                                                        the regulations, and orders or notices.
226.168 (new)...........................  N/A........................  The proposed rule authorizes ONRR to
                                                                        issue assessments for incorrect or late
                                                                        royalty and production reporting and
                                                                        specifies the amount of such
                                                                        assessments.
226.169 (new)...........................  N/A........................  The proposed rule authorizes ONRR to
                                                                        issue assessments for failing to submit
                                                                        the correct payment amount or providing
                                                                        inadequate or erroneous information and
                                                                        specifies the amounts of such
                                                                        assessments.
226.170 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        procedure ONRR will use to notify
                                                                        reporters and payors of violations that
                                                                        have a period to correct prior to the
                                                                        assessment of penalties and the penalty
                                                                        amounts imposed if violations are not
                                                                        timely corrected.
226.171 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        procedure ONRR will use to notify
                                                                        reporters and payors of violations that
                                                                        do not have a period to correct prior to
                                                                        the assessment of penalties and the
                                                                        penalty amounts imposed.
226.172 (new)...........................  N/A........................  The proposed rule specifies the factors
                                                                        ONRR will consider in determining the
                                                                        amount of the penalty to assess.
226.173 (new)...........................  N/A........................  The proposed rule specifies the due date
                                                                        for remitting payment of penalties and
                                                                        assessments to ONRR and that interest on
                                                                        unpaid and underpaid penalty and
                                                                        assessment amounts will be charged at
                                                                        the rate set forth in Sec.   226.166(b).

[[Page 2442]]

 
226.174 (new)...........................  N/A........................  The proposed rule specifies the actions
                                                                        ONRR may take to collect unpaid civil
                                                                        penalties.
226.175 (new)...........................  N/A........................  The proposed rule specifies that ONRR
                                                                        will refer past due debts to the U.S.
                                                                        Treasury for collection or tax refund
                                                                        offset and may assess administrative
                                                                        costs.
226.176.................................  226.43(j)..................  No substantive change.
226.177.................................  226.44.....................  The proposed rule clarifies the
                                                                        procedures for filing administrative
                                                                        appeals of decisions the Superintendent
                                                                        and Regional Director issue.
226.178 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        procedures for filing administrative
                                                                        appeals of orders that ONRR issues.
226.179 (new)...........................  N/A........................  The proposed rule specifies the
                                                                        conditions for suspension of compliance
                                                                        with an ONRR order during an
                                                                        administrative appeal.
226.180 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        requirements for posting an appeal bond
                                                                        or other surety on an appellant's behalf
                                                                        for administrative appeals of ONRR
                                                                        orders.
226.181 (new)...........................  N/A........................  The proposed rule specifies when an
                                                                        obligation to comply with an ONRR order
                                                                        is suspended due to judicial review.
226.182 (new)...........................  N/A........................  The proposed rule specifies when ONRR
                                                                        will collect bonds and other surety
                                                                        instruments posted for administrative
                                                                        appeals.
226.183 (new)...........................  N/A........................  The proposed rule specifies that the ONRR
                                                                        bond-approving officer's determination
                                                                        of the required surety amount is not
                                                                        subject to appeal.
226.184 (new)...........................  N/A........................  The proposed rule sets forth the
                                                                        standards for ONRR-specified surety
                                                                        instruments.
226.185 (new)...........................  N/A........................  The proposed rule explains how ONRR will
                                                                        determine the bond or surety instrument
                                                                        amount.
Appendix A..............................  N/A........................  Table of Atmospheric Pressures to be used
                                                                        with Sec.  Sec.   226.123(a)(7) and
                                                                        (c)(10), 226.124(c), 226.126(a)(3), and
                                                                        226.127(b).
----------------------------------------------------------------------------------------------------------------

VI. Procedural Matters

A. Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order 12866 provides that the Office of Information and 
Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB) 
will review all significant rules. OIRA determined that this proposed 
rule is not significant.
    Executive Order 13563 reaffirms the principles of Executive Order 
12866, while calling for improvements in the Nation's regulatory system 
to promote predictability, to reduce uncertainty, and to use the best, 
most innovative, and least burdensome tools for achieving regulatory 
ends. The Executive Order directs agencies to consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public where these approaches are relevant, feasible, 
and consistent with regulatory objectives. Executive Order 13563 
further emphasizes that regulations must be based on the best available 
science and that the rulemaking process must allow for public 
participation and an open exchange of ideas. We developed this proposed 
rule in a manner consistent with these requirements.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) (RFA) 
requires Federal agencies to prepare a regulatory flexibility analysis 
for rules subject to notice-and-comment rulemaking requirements under 
the Administrative Procedure Act (5 U.S.C. 500, et seq.) to determine 
whether a regulation would have a significant economic impact on a 
substantial number of small entities. The BIA does not believe the 
proposed rule would have a significant economic impact on a substantial 
number of small entities. Accordingly, a regulatory flexibility 
analysis is not required by the RFA. Although such analysis is not 
required, BIA performed an initial regulatory flexibility analysis 
pursuant to section 603 of the RFA as part of its Regulatory Impact 
Analysis (RIA). The IFRA, included as Appendix B to the RIA, analyzes 
impacts on small entities that may be affected by the proposed rule and 
is available upon request (see ADDRESSES). The IFRA for the proposed 
rule uses the best available information to identify potential impacts 
on small entities.
    Small entities include small businesses, small governmental 
jurisdictions, and small organizations, as defined by section 601 of 
the RFA. A small entity is one that is independently owned and operated 
and is not dominant in its field of operation. The small entities most 
likely to be impacted by the proposed rule are small businesses in the 
mining sector; impacts to small governmental jurisdictions and small 
organizations are not anticipated. The Small Business Administration 
(SBA) defines small businesses in the crude petroleum and natural gas 
extraction industry as those with 1,250 employees or less. For 
subsector mining support activities, the SBA defines small businesses 
as drilling contractors with 1,000 employees or less and service 
companies with less than $41.5 million per year in revenues. Under 
these size standards, most oil and gas lessees and supporting entities 
within the Osage Mineral Estate would be classified as small 
businesses. Accordingly, the proposed rule would likely impact a 
substantial number of small entities within the Osage Mineral Estate.
    Using the best available data for the past three years of 
production (2018-2020), there were an average of 223 lessees actively 
and exclusively producing oil from the Osage Mineral Estate, 5 lessees 
actively and exclusively producing gas from the Osage Mineral Estate, 
and 59 lessees actively producing both oil and gas from the Osage 
Mineral Estate, for a combined average of 286 lessees actively 
producing oil and gas. The volume of production varies substantially 
across lessees, with a substantial number of smaller lessees producing 
marginal volumes of oil and gas and several larger lessees producing 
the majority of annual production from the Osage Mineral Estate. For 
example, two lessees produced over 250,000 barrels of oil annually 
between 2018 and 2020, comprising 41 percent of all oil production from 
the Osage Mineral Estate during that period. In contrast, approximately 
100 lessees during the same period produced less than 1,000 barrels of 
oil annually. The allocation of production for gas is similarly skewed.
    To estimate the economic impacts on small entities, the IFRA 
estimates costs of the proposed rule for ``average'' lessees (286 
active lessees) by assuming that lessees produce an average volume

[[Page 2443]]

of oil and gas, that costs are shared equally across lessees, and that 
small entities would bear all costs of the proposed rule. The estimated 
costs of the proposed rule (including compliance costs, reporting and 
recordkeeping costs, and other payments) are $18,000 to $26,000 per 
year for ``average'' lessees, which could represent between 15 to 65 
percent of annual profits depending on the lessee. As the IFRA assumes 
that costs are shared equally across lessees, however, the estimated 
per entity costs are higher than would be expected for lessees with 
small production volumes and lower than would be expected for lessees 
with large production volumes. For example, a lessee producing marginal 
oil volumes will have lower impacts from a change in the valuation of 
oil for royalty purposes than a lessee producing the ``average'' volume 
of oil.
    The BIA does not believe the proposed rule would conflict with, 
duplicate, or overlap any relevant Federal rules in a way that would 
unnecessarily add cumulative regulatory burdens on small entities 
without any gain in regulatory benefits. BIA invites public comments 
identifying any Federal rules that may conflict with, duplicate, or 
overlap the proposed rule.

C. Small Business Regulatory Enforcement Fairness Act

    This proposed rule is not a major rule under the Small Business 
Regulatory Enforcement Fairness Act, 5 U.S.C. 804(2). This proposed 
rule would not have an annual effect on the economy of $100 million or 
more; would not cause a major increase in the costs or prices for 
consumers, individual industries, Federal, State, local government 
agencies, or geographic regions; and would not have significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of U.S.-based enterprises to compete with 
foreign-based enterprises.

D. Unfunded Mandates Reform Act

    This proposed rule would not impose an unfunded mandate on State, 
local, or Tribal governments or the private sector of $100 million or 
more per year. The proposed rule would not have a significant or unique 
effect on State, local, or Tribal governments or the private sector. A 
statement containing the information required by the Unfunded Mandates 
Reform Act, 2 U.S.C. 1531, et seq., is not required for this proposed 
rule.

E. Takings (Executive Order 12630)

    This proposed rule would not constitute a taking of private 
property or otherwise have takings implications under Executive Order 
12630. The proposed rule would revise certain operational and 
administrative requirements for existing lessees. All such operations 
are subject to lease terms and conditions and a current regulation 
expressly requiring compliance with amendments to the regulations 
except that the term of the lease, acreage, rental rate, and royalty 
rate may not be changed absent agreement by both parties to the lease. 
The proposed rule conforms to those requirements. A takings implication 
assessment is not required.

F. Federalism (Executive Order 13132)

    Under the criteria in Executive Order 13132, this proposed rule 
would not have a substantial direct effect on the States, the 
relationship between the Federal Government and the States, or the 
distribution of power and responsibilities among the various levels of 
government. A federalism impact statement is not required.

G. Civil Justice Reform (Executive Order 12988)

    This proposed rule complies with the requirements of Executive 
Order 12988. Specifically, this proposed rule was reviewed to eliminate 
errors and ambiguity and written to minimize litigation. In addition, 
this proposed rule was written in clear language and contains clear 
legal standards.

H. Consultation With Indian Tribal Governments (Executive Order 13175)

    The BIA evaluated this proposed rule under the criteria set forth 
in Executive Order 13175 and in accordance with Departmental policy to 
identify possible effects on federally recognized Indian Tribes and 
Indian trust assets. This proposed rule applies to oil and gas leasing 
and development activities within the Osage Mineral Estate in Osage 
County, Oklahoma. As the Osage Mineral Estate is held in trust by the 
United States for the benefit of the Osage Nation, this proposed rule 
has the potential to affect the Osage Nation.
    On September 22, 2016, the BIA sent letters to the Osage Nation and 
Osage Minerals Council inviting their participation in government-to-
government consultation to discuss potential revision of the 
regulations in this part. Both the Osage Nation and Osage Minerals 
Council expressed an interest in such consultation. On October 25, 
2016, the BIA held a consultation with the Osage Nation, Osage Minerals 
Council, and their legal counsel in Pawhuska, Oklahoma and the parties 
agreed that revision of the regulations was appropriate. As part of the 
rulemaking effort, the BIA proposed that the process include an 
opportunity for the Osage Nation and Osage Minerals Council to provide 
input on proposed revisions to the regulations prior to the BIA 
preparing the proposed rule for publication in the Federal Register. 
The parties agreed that the BIA would prepare a discussion draft 
revising the regulations, provide it to the Osage Nation and Osage 
Minerals Council for review and comment, and hold a second government-
to-government consultation to discuss Tribal representatives' feedback. 
Thereafter, the BIA would begin preparation of the proposed rule.
    On August 18, 2020, the BIA provided the Osage Nation and Osage 
Minerals Council with the discussion draft revising the regulations in 
25 CFR part 226. The BIA proposed that the parties conduct the second 
government-to-government consultation to receive the Tribe's feedback 
on the discussion draft in November 2020. On October 7, 2020, the Osage 
Minerals Council requested that the review period for the discussion 
draft be extended to February 1, 2021. The BIA agreed to the extension. 
On December 16, 2020, the Osage Minerals Council requested an 
additional government-to-government consultation prior to providing 
feedback on the discussion draft. The BIA agreed to conduct an 
additional consultation, but the Osage Nation and Osage Minerals 
Council did not respond to communications attempting to schedule the 
consultation.
    On February 11, 2021, the Director of the Bureau of Indian Affairs, 
exercising the delegated authority of the Assistant Secretary--Indian 
Affairs, sent a letter to the Osage Nation and Osage Minerals Council 
advising of the deadline for scheduling the additional consultation 
requested and providing feedback on the discussion draft. On February 
25, 2021, the Osage Minerals Council responded and declined the BIA's 
invitation to provide written feedback on the discussion draft and 
participate in government-to-government consultations relating thereto. 
The BIA advised the Osage Nation and Osage Minerals Council that they 
would still have the opportunity to provide feedback following 
publication of the proposed rule in the Federal Register.
    On February 22, 2022, the Osage Minerals Council sent a letter to 
the Assistant Secretary--Indian Affairs requesting that the BIA not 
publish a proposed rule based on the discussion

[[Page 2444]]

draft the Council received in 2020 and, instead, work with the Council 
to prepare a new set of regulations. The Assistant Secretary--Indian 
Affairs spoke with the Chairman of the Osage Minerals Council by phone 
and explained that the proposed rule had already been prepared and the 
BIA was in the process of completing the procedural requirements for 
publication. The Assistant Secretary--Indian Affairs advised that the 
BIA remained open to consulting with the Osage Nation and Osage 
Minerals Council following publication of the proposed rule in the 
Federal Register and noted that written feedback can also be provided 
as part of the public comment process.

I. Paperwork Reduction Act

    All information collections require approval under the Paperwork 
Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et seq. We may not conduct 
or sponsor, and you are not required to respond to, a collection of 
information unless it displays a currently valid Office of Management 
and Budget (OMB) Control Number. There are BIA and ONRR information 
collection requirements in this proposed rule. The BIA is proposing to 
renew its information collection with revisions (OMB Control No. 1076-
0180) and ONRR is proposing to renew two information collections with 
revisions (OMB Control Nos. 1012-0004 and 1012-0006).
1. OMB Control Number 1076-0180 (BIA)
    The OMB has reviewed and approved information collections for the 
existing regulations in 25 CFR part 226, which are assigned OMB Control 
No. 1076-0180. The BIA is proposing to renew information collection 
1076-0180 with revisions. The following BIA revisions to reporting and 
recordkeeping requirements in the proposed rule require OMB's approval:

----------------------------------------------------------------------------------------------------------------
               Section(s)                    Proposed revision(s) to OMB 1076-0180       OMB 1076-0180 form(s)
----------------------------------------------------------------------------------------------------------------
226.6(b)................................  Lessees must provide the name and address   Osage Form A--Lease
                                           for a designated point of contact upon      Contact of Record.
                                           whom the Superintendent can serve
                                           official correspondence regarding the
                                           lease and operations thereon.
226.9(a)................................  Lessees may submit a draft environmental    None.
                                           assessment (EA) for proposed drilling
                                           operations and any other proposed ground-
                                           disturbing activities occurring outside
                                           the existing well pad. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.2(c).
226.9(b)................................  Lessees must submit a Cultural Resources    None.
                                           Survey for proposed drilling operations
                                           and any other proposed ground-disturbing
                                           activities occurring outside the existing
                                           well pad if the location of the
                                           operations or activities is not covered
                                           by a prior survey. This requirement is
                                           the same as the requirement in existing
                                           Sec.   226.2(c).
226.12(b)...............................  The Osage Minerals Council (OMC) may        None.
                                           request that the Superintendent negotiate
                                           a non-competitive lease with a
                                           prospective lessee on its behalf by
                                           submitting a Resolution authorizing the
                                           Superintendent to undertake such action.
                                           This requirement is the same as the
                                           requirement in existing Sec.   226.2(f).
226.13(a)...............................  The OMC may request that the                None.
                                           Superintendent advertise a competitive
                                           lease sale by submitting a Resolution
                                           that specifies the proposed location,
                                           date, and time of the lease sale as well
                                           as the minimum acceptable bid. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.2(f).
226.14(a)...............................  An individual who wants to nominate a       None.
                                           tract for a competitive lease sale must
                                           submit a nomination letter that includes
                                           their name and address as well as the
                                           legal description of the tract they are
                                           nominating. This requirement is the same
                                           as the requirement in existing Sec.
                                           226.2(a).
226.17(a)(2) through (4)................  The successful bidder at a competitive      Osage Form B--Evidence of
                                           lease sale must submit an executed lease    Authority to Execute
                                           form, evidence of authority to execute      Papers.
                                           papers form, and certificate of good       Osage Form C--Oil and/or
                                           standing from the Oklahoma Secretary of     Gas Mining Lease.
                                           State. This requirement is the same as
                                           the requirement in existing Sec.
                                           226.2(b).
226.19(a)(2) through (4)................  A prospective lessee who negotiates a non-  Osage Form B--Evidence of
                                           competitive lease with the OMC must         Authority to Execute
                                           submit an executed lease form, evidence     Papers.
                                           of authority to execute papers form, and   Osage Form C--Oil and/or
                                           certificate of good standing from the       Gas Mining Lease.
                                           Oklahoma Secretary of State. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.2(f).
226.21(b)...............................  Lessees may submit a lease amendment form   Osage Form D--Lease
                                           evidencing an agreement between the         Amendment.
                                           lessee and OMC to extend the primary term
                                           of the lease. This requirement is the
                                           same as the requirement in existing Sec.
                                            226.9(b).
226.24(b)...............................  The lessee or OMC may submit a proposed     None.
                                           cooperative agreement whereby the parties
                                           agree to unitize or merge one or more
                                           leases of the Osage Mineral Estate to
                                           promote development. This requirement is
                                           the same as the requirement in existing
                                           Sec.   226.15(a).
226.24(c)...............................  The lessee or OMC may submit an agreement   None.
                                           whereby the parties agree to modify,
                                           amend, or terminate an approved
                                           cooperative agreement. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.15(a).
226.26(c)...............................  A lessee (assignor) may submit a lease      Osage Form E--Assignment
                                           assignment form transferring record title   of Record Title Interest.
                                           in an approved lease to another existing
                                           or prospective lessee (assignee). This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.15(b).
226.33(a)...............................  Lessees must submit a request to surrender  None.
                                           all or part of an approved lease. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.3.
226.34(d)...............................  Lessees must submit a copy of any           None.
                                           agreement with a surface owner where the
                                           parties agree that the lessee can remove
                                           permanent improvements from the lease
                                           following termination. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.29(a).

[[Page 2445]]

 
226.36..................................  The OMC must submit a Resolution approving  None.
                                           a royalty rate for oil that is below the
                                           regulatory minimum of 12\1/2\ percent.
                                           This requirement is the same as the
                                           requirement in existing Sec.   226.11(a).
226.39..................................  The OMC must submit a Resolution approving  None.
                                           a royalty rate for gas that is below the
                                           regulatory minimum of 12\1/2\ percent.
                                           This requirement is the same as the
                                           requirement in existing Sec.   226.11(b).
226.42(b)...............................  The OMC must submit a Resolution providing  None.
                                           notice of its intention to take oil and/
                                           or gas royalty in kind. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.11(a), except that
                                           the new provision allows the OMC to take
                                           both oil and gas royalty in kind, instead
                                           of allowing the OMC to only take oil
                                           royalty in kind.
226.44(a)...............................  Lessees must submit contracts or division   None.
                                           orders with purchasers of oil and gas.
                                           This requirement is the same as the
                                           requirement in existing Sec.   226.14,
                                           except that the Superintendent's approval
                                           of contracts and division orders is no
                                           longer required.
226.46(b)...............................  Lessees must make, retain, and preserve     None.
                                           royalty, rental, and payment records for
                                           six years from the date upon which the
                                           relevant transaction was recorded or such
                                           longer period as the Superintendent or
                                           ONRR may require. This requirement is the
                                           same as the requirement in existing Sec.
                                            226.30, except that it reduces the
                                           burden by providing a specific timeframe
                                           for record retention and clarifies that
                                           both the Superintendent ONRR may request
                                           the subject records.
226.51(c), 226.52(a) and (b)............  Lessees must file an individual well bond   Osage Form F--Oil and Gas
                                           for each well the lessee proposes to        Lease Bond.
                                           drill, reenter, recomplete, or accept
                                           responsibility for through assignment; a
                                           countywide bond covering all leases of
                                           the Osage Mineral Estate (10,240 acres
                                           maximum); or a nationwide bond covering
                                           all leases within the United States to
                                           which the lessee is a party. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.6(a).
226.56(a) and (c).......................  Lessees and permittees must file an Oil     Osage Form G--Oil and Gas
                                           and Gas Exploration Bond Form for           Geophysical Exploration
                                           geophysical exploration operations. An      Bond.
                                           existing lessee with a countywide or
                                           nationwide Oil and Gas Lease Bond may
                                           file a bond rider covering geophysical
                                           exploration operations in lieu of filing
                                           an Oil and Gas Exploration Bond. There is
                                           no form for bond riders because they are
                                           prepared by the surety.
226.65(b)...............................  Lessees must submit a request to expand an  None.
                                           approved drilling site beyond the acreage
                                           set forth in the approved EA. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.19(b).
226.66(a)...............................  Lessees must submit an application for a    Osage Form 139--
                                           permit to drill or reenter a well. This     Application for Permit to
                                           requirement is the same as the              Drill or Workover Wells.
                                           requirement in existing Sec.   226.16(b),
                                           but the burden on respondents is reduced
                                           because Osage Form 139 is now a fillable
                                           form that can be completed and submitted
                                           electronically.
226.66(c)...............................  Lessees must notify the Superintendent of   None.
                                           planned drilling and reentry operations
                                           five days prior to the commencement
                                           thereof. Notice may be provided by phone
                                           or email. This requirement is the same as
                                           the requirement in existing Sec.
                                           226.16(c), except that the new provision
                                           specifies that the timeframe for
                                           providing notice is five days as opposed
                                           to ``a reasonable time in advance.''.
226.66(d)...............................  Lessees must submit a request to drill a    None.
                                           well within 300 feet of the lease
                                           boundary or locate a well or tank within
                                           200 feet of roads or highways maintained
                                           for public use, water sources, and
                                           residences, granaries, and barns. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.33.
226.67(b)...............................  Lessees must submit a request to drill a    None.
                                           well that deviates significantly from the
                                           vertical and report the drilling of any
                                           well that deviates significantly from the
                                           vertical without prior approval.
226.69(a)...............................  Lessees must submit an application for a    Osage Form 139--
                                           permit to workover a well. This             Application for a Permit
                                           requirement is the same the requirement     to Drill or Workover
                                           in existing Sec.   226.16(b), but the       Wells.
                                           burden hours are reduced because Osage
                                           Form 139 is now a fillable form that can
                                           be completed and submitted electronically.
226.69(c)...............................  Lessees must notify the Superintendent of   None.
                                           planned workover operations five days
                                           prior to the commencement thereof. Notice
                                           may be provided by phone or email. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.16(c),
                                           except that the new provision specifies
                                           that the timeframe for providing notice
                                           is five days as opposed to ``a reasonable
                                           time in advance.''.
226.70(a)...............................  Lessees must submit the results of H2S      None.
                                           concentration tests upon request and
                                           submit radius of exposure calculations
                                           for any well or production facility with
                                           an H2S concentration of 100 ppm or more.
226.70(b)(1) and (2)....................  Lessees must report any release of a        None.
                                           potentially hazardous volume of H2S as
                                           soon as practicable, but not later than
                                           24 hours following identification of the
                                           release. Notice must be provided by
                                           phone. A lessee must submit a Public
                                           Protection Plan for the potential release
                                           of a hazardous volume of H2S if:
                                          1. The 100 ppm radius of exposure is
                                           greater than 50 feet and includes any
                                           part of a residence, school, church,
                                           park, place of business, or other area
                                           the general public can reasonably be
                                           expected to frequent;
                                          2. The 500 ppm radius of exposure is
                                           greater than 50 feet and includes any
                                           part of a federal, state, county, or
                                           municipal road or highway that is owned
                                           and maintained for public use; or

[[Page 2446]]

 
                                          3. The 100 ppm radius of exposure if
                                           greater than or equal to 3,000 feet.
                                          The regulations specify the information
                                           that Public Protection Plans must
                                           include.
226.70(d)...............................  Lessees must maintain a record of all       None.
                                           tests of H2S monitoring systems and make
                                           the records available to the
                                           Superintendent upon request.
226.72..................................  Lessees must submit a request to            None.
                                           temporarily abandon a well for more than
                                           30 calendar days. This requirement is the
                                           same as the requirement in existing Sec.
                                            226.28.
226.73(d)...............................  Lessees must submit an application for a    Osage Form 139--
                                           permit to plug a well. This requirement     Application for a Permit
                                           is the same the requirement in existing     to Drill, Workover, or
                                           Sec.   226.28(a), (c), but the burden       Plug Wells.
                                           hours are reduced because Osage Form 139
                                           is now a fillable form that can be
                                           completed and submitted electronically.
226.73(f)...............................  Lessees must notify the Superintendent of   None.
                                           planned plugging operations five days
                                           prior to the commencement thereof. Notice
                                           may be provided by phone or email. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.16(c),
                                           except that the new provision specifies
                                           that the timeframe for providing notice
                                           is five days as opposed to ``a reasonable
                                           time in advance.''.
226.73(h)...............................  Lessees must submit any agreement with a    None.
                                           surface owner whereby the parties agree
                                           that lessee will condition a well that is
                                           being plugged for the surface owner's use
                                           as a water supply well. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.29(d).
226.74(a)...............................  Lessees must make all books and records     None.
                                           relating to lease operations available to
                                           the Superintendent upon request. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.30.
226.74(c) through (f)...................  Lessees must submit a report upon           Osage Form 208--Well
                                           completion of all approved drilling,        Completion or
                                           workover, and plugging operations,          Recompletion Report.
                                           together with copies of the results for    Osage Form 209--Report of
                                           all samples, tests, and surveys conducted   Workover or Plugging
                                           on the well; copies of the electrical,      Operations.
                                           mechanical, and radioactive logs or other  Osage Form 210--
                                           surveys of the wellbore; core analysis;     Withholding of
                                           and for plugging operations, cementing      Proprietary Hydraulic
                                           tickets. This requirement is the same as    Fracturing Information.
                                           the requirement in existing Sec.
                                           226.32(a), (b) and (c).
                                          Lessees must submit a report upon
                                           completion of hydraulic fracturing
                                           operations together with a report of the
                                           fracking fluids used. The regulations
                                           specify the information that such reports
                                           of fracking fluids must include. Lessees
                                           or owners of the fracking fluid
                                           information may withhold proprietary
                                           information that is exempt from public
                                           disclosure by submitting a signed
                                           withholding statement..
226.74(h)...............................  Lessees must maintain well records and      None.
                                           reports for six years from the date they
                                           were generated unless the Superintendent
                                           requires a longer retention period due to
                                           an audit or investigation. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.32(c),
                                           except that the new provision specifies
                                           the timeframe for retention.
226.76..................................  Lessees must submit the results of tests    None.
                                           and surveys performed to establish the
                                           effectiveness of measures taken to
                                           protect fresh water and mineral bearing
                                           formations upon request. This requirement
                                           is the same as the requirement in
                                           existing Sec.   226.35.
226.77(c)...............................  Lessees must submit a request to            None.
                                           construct, utilize, enlarge, or relocate
                                           a pit. This requirement is the same as
                                           the requirement in existing Sec.
                                           226.22(d).
226.77(d)...............................  Lessees must file a copy of any agreement   None.
                                           whereby the lessee and surface owner
                                           reach an alternative agreement regarding
                                           the emptying and leveling of pits. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.22(b).
226.77(f)...............................  Lessees must submit a request for the land- None.
                                           application of waste.
226.79(a)...............................  A lessee or individual wishing to conduct   Osage Form 339--
                                           oil and gas geophysical exploration         Application for Oil and
                                           activities within the Osage Mineral         Gas Geophysical
                                           Estate must submit an Application for an    Exploration Permit.
                                           Oil and Gas Geophysical Exploration
                                           Permit. This requirement is the same as
                                           the requirement in existing Sec.
                                           226.16(a), except that the Proposed Rule
                                           provides a form for such applications.
226.80..................................  A lessee or permittee must notify the       None.
                                           Superintendent of planned oil and gas
                                           geophysical operations five days prior to
                                           the commencement thereof. Notice may be
                                           provided by phone or email.
226.81..................................  A lessee or permittee must submit a         Osage Form 408--Completion
                                           Completion Report for Oil and Gas           Report for Oil and Gas
                                           Geophysical Exploration Operations          Geophysical Exploration
                                           providing a subsequent report of the        Operations.
                                           exploration operations performed.
226.82(d)...............................  A person claiming an interest in leased     None.
                                           lands for the purpose of the settlement
                                           of surface damages must notify the
                                           Superintendent of that interest. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.20(d).
226.83(f)...............................  A lessee or permittee must file a report    None.
                                           of each settlement agreement whereby the
                                           lessee or permittee and an Indian
                                           landowner agree to the amount of surface
                                           damages to be paid. This requirement is
                                           the same as the requirement in existing
                                           Sec.   226.21(g).
226.84(e)...............................  Lessees must report the emergency pumping   None.
                                           of oil into a pit. Emergency reports must
                                           be submitted by phone.

[[Page 2447]]

 
226.86(a) through (e)...................  Lessees must submit a site facility         None.
                                           diagram for all permanent facilities. The
                                           regulations specify the information that
                                           site facility diagrams must include and
                                           the timeframe for submitting site
                                           facility diagrams, which varies depending
                                           on the date the relevant facilities
                                           became operational. Lessees have an
                                           ongoing obligation to update and amend
                                           site facility diagrams if facilities are
                                           modified to ensure that the diagrams
                                           accurately represent facilities. Sample
                                           site facility diagrams are available at
                                           https://www.bia.gov/regional-offices/eastern-oklahoma/osage-agency.
226.88(a) through (c)...................  Lessees, purchasers, transporters, and      None.
                                           other persons involved in producing,
                                           transporting, purchasing, selling, or
                                           measuring oil and gas must retain all
                                           records for a minimum of six years from
                                           the date upon which the relevant
                                           transaction was recorded unless the
                                           Superintendent or ONRR requires retention
                                           for a longer period. Such records must be
                                           made available to the Superintendent or
                                           ONRR upon request. The regulations
                                           specify the information that production
                                           records must include.
226.92(b)...............................  A lessee may request the use of             None.
                                           alternative protective measures to
                                           prevent drainage.
226.97(a) and (b).......................  Persons engaged in transporting oil by      None.
                                           motor vehicle or pipeline must maintain
                                           documentation showing the amount, origin,
                                           and intended first purchaser of the oil.
226.98..................................  Lessees, purchasers, or transporters who    None.
                                           drain water from a production storage
                                           tank must document such draining
                                           operations. The regulations specify the
                                           information that documentation of water
                                           draining operations must include.
226.99(a)...............................  Lessees must document the removal of oil    None.
                                           from storage, temporary use of the oil
                                           for operations, and return of the oil to
                                           storage during hot-oil, clean-up, or
                                           completion operations. The regulations
                                           specify the information that
                                           documentation for temporary removal of
                                           oil from storage must include.
226.100.................................  Lessees must maintain a record of the       None.
                                           seals used on valves and meter
                                           components. The regulations specify the
                                           information that seal records must
                                           include.
226.101(a)..............................  Lessees must submit a request for off-      None.
                                           lease measurement of production. The
                                           regulations specify the information that
                                           requests for off-lease measurement of
                                           production must include.
226.102(a) and (c)......................  Lessees must report spills, theft,          Osage Form H--Spill and
                                           mishandling of production, blowouts,        Remediation Report.
                                           fires, and accidents that occur on the
                                           lease by phone or email immediately upon
                                           discovery, but not later than one
                                           calendar day following discovery. Lessees
                                           must also submit a written report of the
                                           incident together with a proposed
                                           contingency or remediation plan. The
                                           initial report of spills, theft,
                                           mishandling of production, blowouts,
                                           fires, and accidents is provided by
                                           phone. This requirement is the same as
                                           the requirement in existing Sec.   226.41.
226.107(f)..............................  Lessees measuring oil by tank gauging must  None.
                                           submit tank tables within 45 days after
                                           calibrating a tank or recalculation of
                                           the tables. This requirement is the same
                                           as the requirement in existing Sec.
                                           226.38, except that the new provision
                                           specifies the timeframe for submitting
                                           tank tables.
226.108(a)..............................  Lessee must submit a request to use         None.
                                           automatic tank gauging for oil
                                           measurement. The regulations specify the
                                           information that requests to use
                                           automatic tank gauging must include. This
                                           requirement is the same as the
                                           requirement in existing Sec.   226.38.
226.108(b)(5)(ii)(B)....................  Lessees must submit a detailed log of       None.
                                           field verifications of automatic tank
                                           gauges upon request. This requirement is
                                           the same as the requirement in existing
                                           Sec.   226.38.
226.109(e)..............................  Lessees must provide notice of any LACT     None.
                                           system failures or equipment malfunctions
                                           that may have resulted in measurement
                                           error within 15 calendar days of
                                           discovering such failure or malfunction.
226.112(c), (e), (f), and (g)...........  Lessees must submit Coriolis meter          None.
                                           specifications upon request. Lessees must
                                           maintain the following information on-
                                           site at the FMP:
                                           Make, model, and size of each
                                           sensor;
                                           Make, model, range, and
                                           calibrated span of the pressure and
                                           temperature transducers used to determine
                                           gross standard volume; and
                                           A log of all meter factors, zero
                                           verifications, and zero adjustments.
                                          Lessees must retain QTRs, configuration
                                           logs, event logs, and alarm logs for six
                                           years from the date they were generated
                                           or such longer period as the
                                           Superintendent may require.
226.113(b)..............................  Lessees must have a certificate of          None.
                                           calibration for the meter prover (e.g., a
                                           device that verifies the accuracy of the
                                           meter) on-site and available for review.
226.113(j)..............................  Lessees must submit a report of meter       None.
                                           proving and volume adjustments within 14
                                           days after any LACT system or CMS
                                           malfunction, including excessive meter-
                                           factor deviation.
226.114(d)..............................  Lessees must submit run tickets on or       None.
                                           before the last calendar day of the month
                                           following the production month. The
                                           regulations specify the information that
                                           run tickets for tank gauging, LACT, and
                                           CMS must include. This requirement is the
                                           same as the requirement in existing Sec.
                                            226.16(b), except that the new provision
                                           specifies the information run tickets
                                           must contain. The information required is
                                           consistent with what is currently
                                           submitted and prevailing industry
                                           standards.
226.115.................................  Lessees must submit a request to use any    None.
                                           method of oil measurement other than tank
                                           gauging, LACT system, or CMS.

[[Page 2448]]

 
226.116(c)..............................  Lessees must submit a request to sell or    None.
                                           dispose of slop oil and, following the
                                           approved sale or disposal of slop oil,
                                           must submit a report identifying the
                                           volume of slop oil sold or disposed of,
                                           the method used to computer that volume,
                                           and the gross revenue from the sale. This
                                           provision codifies lessees' existing
                                           practices for the sale or disposal of
                                           slop oil. Accordingly, it does not impose
                                           a new burden on lessees with respect to
                                           such sales.
226.121(e)..............................  Lessees must document orifice plate         None.
                                           inspections and include that
                                           documentation as part of the verification
                                           report submitted in accordance with Sec.
                                           Sec.   226.123 (for mechanical recorders)
                                           or 226.126 (for EGM systems). The
                                           regulations specify the information that
                                           documentation of orifice plate
                                           inspections must include.
226.121(i)..............................  Lessees must document meter tube            None.
                                           inspections and must make such
                                           documentation available upon request. The
                                           regulations specify the information that
                                           documentation of meter tube inspections
                                           must include.
226.121(j)..............................  Lessees must notify the Superintendent at   None.
                                           least 72 hours in advance of performing
                                           basic or detailed meter tube inspections
                                           under Sec.   226.121(d), (g), and (h) or
                                           submit a monthly or quarterly schedule or
                                           inspections. Notice may be provided by
                                           phone or email. This provision codifies
                                           lessees' existing practice of providing
                                           notice of meter tube inspections but
                                           specifies that 72 hours' advance notice
                                           be provided. The provision introduces the
                                           option for lessees to submit inspection
                                           schedules to provide additional
                                           flexibility for notice requirements.
226.122(g)..............................  Lessees must maintain certain data at FMPs  None.
                                           for mechanical recorders. The regulations
                                           specify the information that mechanical
                                           recorder data maintained at FMPs must
                                           include.
226.123(d)..............................  Lessees must retain documentation of        None.
                                           mechanical recorder verifications and
                                           make such documentation available to the
                                           Superintendent upon request. The
                                           regulations specify the information that
                                           documentation of mechanical recorder
                                           verifications must include.
226.123(e)..............................  Lessees must notify the Superintendent at   None.
                                           least 72 hours in advance of performing
                                           mechanical recorder verifications
                                           following installation or repair or
                                           performing routine verifications. Notice
                                           may be provided by phone or email, or
                                           lessees may submit a monthly or quarterly
                                           schedule of verifications.
226.123(g)..............................  Purchasers or purchasers' representatives   None.
                                           must retain documentation of test
                                           equipment certifications on-site. The
                                           regulations specify the information that
                                           documentation of certification of test
                                           equipment include. This collection does
                                           not impose a burden on respondents
                                           pursuant to 5 CFR 1320.3(h)).
226.124(a)..............................  Lessees must retain an unedited             None.
                                           integration statement and make such
                                           statement available to the Superintendent
                                           upon request. The regulations specify the
                                           information that unedited integration
                                           statements must include. Lessees already
                                           obtain integration statements containing
                                           the above information consistent with
                                           industry standards. This provision
                                           codifies lessees' existing practices. The
                                           requirement to retain such statements is
                                           the same as the requirement in existing
                                           Sec.   226.30.
226.125(e)..............................  Lessees must maintain certain data at FMPs  None.
                                           for EGM systems. The regulations specify
                                           the information that data for EGM systems
                                           must include.
226.126(e)..............................  Lessees must retain documentation of each   None.
                                           verification of EGM systems and make such
                                           documentation available to the
                                           Superintendent upon request. The
                                           regulations specify the information that
                                           documentation of EGM system verifications
                                           must include.
226.126(f)..............................  Lessees must notify the Superintendent at   None.
                                           least 72 hours before conducting routine
                                           EGM system verifications and
                                           verifications following installation or
                                           repairs. Notice may be provided by phone
                                           or email, or lessees may submit a monthly
                                           or quarterly verification schedule. This
                                           provision codifies lessees' existing
                                           practice of providing notice EGM
                                           verifications but specifies that 72
                                           hours' advance notice be provided.
226.126(h)..............................  Purchasers or purchasers' representatives   None.
                                           must maintain documentation of test
                                           equipment certifications on-site. The
                                           regulations specify the information that
                                           documentation of test equipment
                                           certifications must include. This
                                           collection does not impose a burden on
                                           respondents pursuant to 5 CFR 1320.3(h)).
226.128(a)..............................  Lessees must retain QTRs for EGM systems    None.
                                           and make them available to the
                                           Superintendent upon request. The
                                           regulations specify the information that
                                           QTRs for EGM systems must include.
226.128(b)..............................  Lessees must retain the original,           None.
                                           unaltered, unprocessed, and unedited
                                           configuration log for the EGM system and
                                           make it available upon request. The
                                           regulations specify the information that
                                           configuration logs must include.
226.128(c)..............................  Lessees must retain the original,           None.
                                           unaltered, unprocessed, and unedited
                                           event log for the EGM system and make it
                                           available upon request. The regulations
                                           require the configuration log to contain
                                           the information identified in API 21.1,
                                           subsection 5.5 and have sufficient
                                           capacity to be retrieved and stored at
                                           intervals that will maintain a continuous
                                           record of events for either the required
                                           six-year retention period or the life of
                                           the FMP, whichever is shorter.
226.128(d)..............................  Lessees must retain an alarm log and make   None.
                                           it available upon request. The
                                           regulations require alarm logs to comply
                                           with the requirements set forth in API
                                           21.1, Subsection 5.6.

[[Page 2449]]

 
226.131(b)..............................  Lessees must notify the Superintendent at   None.
                                           least 72 hours before obtaining a spot
                                           sample. Notice may be provided by phone
                                           or email, or lessees may submit a monthly
                                           or quarterly sampling schedule. This
                                           provision codifies lessees' existing
                                           practice of providing notice of spot
                                           sampling but specifies that 72 hours'
                                           advance notice be provided. The provision
                                           introduces the option for lessees to
                                           submit spot sample schedules to provide
                                           additional flexibility for notice
                                           requirements.
226.131(c)..............................  Lessees must maintain documentation of the  None.
                                           cleaning of sample cylinders and make
                                           such documentation available upon request.
226.132(a)(2)...........................  Lessees must maintain documentation         None.
                                           demonstrating that the cylinder was
                                           evacuated and pre-charged before sampling
                                           for spot sampling using the Helium
                                           ``pop'' method and make such
                                           documentation available upon request.
226.132(a)(3)...........................  Lessees must maintain documentation of the  None.
                                           seal material and type of lubricant used
                                           for the floating piston cylinder method
                                           of spot sampling and make such
                                           documentation upon request.
226.136(e)..............................  Lessees must retain documentation of the    None.
                                           gas chromatograph verifications and make
                                           the documentation available upon request.
                                           The regulations specify the information
                                           that documentation of gas chromatograph
                                           verifications must include.
226.138(a), (e).........................  Lessees must submit all gas analysis        None.
                                           reports within 14 calendar days after the
                                           due date for the sample as specified in
                                           Sec.   226.133. The regulations specify
                                           the information that gas analysis reports
                                           must include.
226.141(c)(2)...........................  Lessees must document all edits made to     None.
                                           reported heating value or volume data
                                           before the report is submitted to ONRR,
                                           including verifiable justifications for
                                           the edits made, and such documentation
                                           must be made available upon request.
226.142(d)..............................  Lessees must submit a request to stop       None.
                                           furnishing gas to Tribally owned
                                           buildings or enterprises or members of
                                           the Osage Nation residing in Osage
                                           County. This requirement is the same as
                                           the requirement in existing Sec.
                                           226.27(b)(3).
226.146(b)..............................  Lessees must submit a request for certain
                                           royalty-free uses of production on the
                                           lease or unit. The regulations require
                                           the Superintendent's approval of:
                                           Use of oil or gas the lessee       None.
                                           removes from the pipeline at a location
                                           downstream of the FMP;
                                           Use of gas that has been removed
                                           from the lease or unit for treatment or
                                           processing because the particular
                                           physical characteristics of the gas
                                           require it to be treated or processed
                                           prior to use, where the gas is returned
                                           to, and used on, the same lease or unit
                                           from which it is produced; and
                                           Any other uses of produced oil
                                           and gas for operations and production
                                           purposes that are not set forth in Sec.
                                           226.145.
                                          The regulations specify the information
                                           that requests for royalty-free use of
                                           production on the lease or unit must
                                           include.
226.148(c)..............................  Lessees must submit a request for certain   None.
                                           royalty-free uses of production off the
                                           lease or unit. The regulations require
                                           the Superintendent's approval of royalty-
                                           free treatment of oil or gas used in
                                           operations conducted off the lease or
                                           unit if the:
                                           Use is among those listed in Sec.
                                            Sec.   226.145(a) or 226.146(a);
                                           Equipment or facility in which
                                           the operation is conducted is located off
                                           the lease or unit for engineering,
                                           economic, resource protection, or
                                           physical accessibility reasons; and
                                           Operations are conducted upstream
                                           of the FMP.
                                          The regulations specify the information
                                           that requests for royalty use of
                                           production off the lease or unit must
                                           include.
226.149(d)..............................  Lessees must notify the Superintendent in   None.
                                           writing if oil or gas is removed
                                           downstream of the FMP for royalty-free
                                           use pursuant to Sec.  Sec.   226.145
                                           through 226.148 and obtain an approved
                                           FMP to measure the production removed for
                                           use.
226.152(a)..............................  Lessees must submit a request to vent or    None.
                                           flare gas. The regulations require the
                                           Superintendent's approval to vent or
                                           flare gas to ensure that the natural gas
                                           disposed of through venting or flaring is
                                           properly measured and, where applicable,
                                           proper royalties paid. This provision
                                           codifies the Superintendent's existing
                                           notice to lessees requiring prior
                                           approval for all venting and flaring.
                                           Accordingly, this provision does not
                                           impose a new burden on lessees.
226.158.................................  Lessees must submit a self-certification    Osage Form I--Self-
                                           following the correction of any lease       Certification for
                                           violations for which a notice of non-       Correction of Lease
                                           compliance is received. This provision      Violations.
                                           codifies the Superintendent's existing
                                           requirement that self-certification forms
                                           be submitted upon completion of the
                                           correction of lease violations.
                                           Accordingly, this provision does not
                                           impose a new burden on lessees.
----------------------------------------------------------------------------------------------------------------

    Title of Collection: Mining of the Osage Mineral Estate for Oil and 
Gas.
    OMB Control Number: 1076-0180.
    Abstract: Under the 1906 Act, the BIA is required to administer oil 
and gas leasing and development of the Osage Mineral Estate. The BIA 
needs to perform the IC activities set forth in the regulations at 25 
CFR part 226 to perform its responsibilities under the statute.
    Form Number: Osage Form A (Lease Contact of Record); Osage Form B 
(Evidence of Authority to Execute Papers); Osage Form C (Oil and Gas 
Mining Lease); Osage Form D (Lease Amendment); Osage Form E (Assignment 
of Record Title Interest); Osage Form F (Oil and Gas Lease Bond); Osage 
Form G (Oil and Gas Geophysical Exploration Bond); Osage Form H (Spill

[[Page 2450]]

and Remediation Report); Osage Form I (Self-Certification for 
Correction of Lease Violations); Osage Form 139 (Application for Permit 
to Drill or Workover Wells); Osage Form 208 (Well Completion or Reentry 
Report); Osage Form 209 (Report of Workover or Plugging Operations); 
Osage Form 210 (Withholding of Proprietary Hydraulic Fracturing 
Information); Osage Form 339 (Application for Permit to Conduct Oil and 
Gas Geophysical Exploration Operations); Osage Form 408 (Oil and Gas 
Geophysical Exploration Completion Report).
    Type of Review: Revision of a currently approved collection.
    Respondents/Affected Public: Individual Indians, businesses, and 
Tribal authorities.
    Total Estimated Number of Annual Respondents: 4,974.
    Total Estimated Number of Annual Responses: 59,196.
    Estimated Completion Time per Response: Varies from six minutes to 
40 hours.
    Total Estimated Number of Annual Burden Hours: 22,564.
    Respondent's Obligation: Required to obtain a benefit.
    Frequency of Collection: Varies from monthly to yearly.
    Total Estimated Annual Non-Hour Burden Cost: $0.
2. OMB Control Number 1012-0004 (ONRR)
    The OMB has reviewed and approved information collections for 
ONRR's royalty and production reporting operations throughout the rest 
of Indian country, which are assigned OMB Control No. 1012-0004. ONRR 
is proposing to renew information collection 1012-0004 with revisions 
to provide for such collections within the Osage Mineral Estate. The 
following ONRR royalty and production reporting and recordkeeping 
requirements in the proposed rule require OMB's approval:

----------------------------------------------------------------------------------------------------------------
               Section(s)                    Proposed revision(s) to OMB 1012-0004       OMB 1012-0004 Form(s)
----------------------------------------------------------------------------------------------------------------
226.43(c) and (d).......................  Lessees must make royalty payments to ONRR  None.
                                           by EFT (preferred) or the other forms of
                                           payment identified in Sec.   226.8. Non-
                                           EFT royalty payments submitted via U.S.
                                           Postal Service must be addressed to:
                                           Office of Natural Resources Revenue, P.O.
                                           Box 25627, Denver, CO 80225-0627. Royalty
                                           reports submitted manually via courier or
                                           overnight delivery service must be
                                           addressed to: Office of Natural Resources
                                           Revenue, Denver Federal Center, Building
                                           85, Entrance N-1, Room 332, 6th Avenue
                                           and Kipling Street, Denver, CO 80225.
226.45..................................  Lessees must submit certified monthly       ONRR 2014--Report of Sales
                                           royalty reports to ONRR by 4 p.m.           and Royalty Remittance.
                                           mountain time on or before the last
                                           calendar day of the month that follows
                                           the month during which the oil and gas is
                                           produced and sold. Royalty reports must
                                           be submitted electronically via ONRR's
                                           eCommerce Reporting website, https://onrrreporting.onrr.gov, unless the lessee
                                           meets the qualifications for manual
                                           reporting. Royalty reports submitted
                                           manually via U.S. Postal Service must be
                                           addressed to: Office of Natural Resources
                                           Revenue, P.O. Box 25627, Denver, CO 80225-
                                           0627. Royalty reports submitted manually
                                           via courier or overnight delivery service
                                           must be addressed to: Office of Natural
                                           Resources Revenue, Denver Federal Center,
                                           Building 85, Entrance N-1, Room 332, 6th
                                           Avenue and Kipling Street, Denver, CO
                                           80225.
226.46..................................  Lessees must make, retain, and preserve     None.
                                           records demonstrating that rental,
                                           royalty, and other payments relating to
                                           oil and gas leases comply with the terms
                                           and conditions of the lease, the
                                           regulations in 25 CFR part 226, and
                                           applicable orders and notices. Lessees
                                           must preserve records for a minimum of
                                           six years from the date upon which the
                                           relevant transaction was recorded unless
                                           the Superintendent or ONRR provides
                                           notice that records must be maintained
                                           for a longer period due to investigation
                                           or audit. Lessees must make records
                                           available to the Superintendent ONRR for
                                           inspection upon request. Covered under
                                           burden for Sec.  Sec.   226.32(c) and (d)
                                           and 226.45.
226.85..................................  Lessees must submit certified monthly       ONRR 4054--Oil and Gas
                                           productions reports to ONRR by 4 p.m.       Operations Report (OGOR).
                                           mountain time on or before the 15th day
                                           of the second month following the
                                           production month. Production reports must
                                           be submitted electronically via ONRR's
                                           eCommerce Reporting website, https://onrrreporting.onrr.gov, unless the lessee
                                           meets the qualifications for manual
                                           reporting. Production reports submitted
                                           manually via U.S. Postal Service must be
                                           addressed to: Office of Natural Resources
                                           Revenue, P.O. Box 25627, Denver, CO,
                                           80225-0627. Production reports submitted
                                           manually via courier or overnight
                                           delivery service must be addressed to:
                                           Office of Natural Resources Revenue,
                                           Denver Federal Center, Building 85,
                                           Entrance N-1, Room 332, 6th Avenue and
                                           Kipling Street, Denver, CO 80225.
226.88..................................  Lessees, purchasers, transporters, and      None.
                                           other persons involved in producing,
                                           transporting, purchasing, selling, or
                                           measuring oil and gas through the point
                                           of royalty measurement or point of first
                                           sale, whichever is later, must retain all
                                           records, including source records,
                                           relevant to determining the quality,
                                           quantity, disposition, and verification
                                           of production attributable to the subject
                                           lease. The regulations specify the
                                           information that production records must
                                           include. Production records must be
                                           preserved for a minimum of six years from
                                           the date upon which the relevant
                                           transaction was recorded unless the
                                           Superintendent or ONRR provides notice
                                           that records must be maintained for a
                                           longer period due to investigation or
                                           audit. Lessees must make records
                                           available to the Superintendent ONRR for
                                           inspection upon request. Covered under
                                           burden for Sec.   226.85.
----------------------------------------------------------------------------------------------------------------

    Title of Collection: Royalty and Production Reporting.
    OMB Control Number: 1012-0004.
    Revisions: Under the 1906 Act, the BIA is required to administer 
oil and gas

[[Page 2451]]

leasing and development of the Osage Mineral Estate. The proposed rule 
would allow BIA to transfer the royalty and production reporting and 
compliance functions for the Osage Mineral Estate to ONRR. ONRR would 
perform the specified IC activities in 25 CFR part 226 to carry out the 
BIA's responsibilities and ensure that lessees pay proper royalties and 
revenues on oil and gas produced from the Osage Mineral Estate. The 
requirement to timely and accurately report royalties and production is 
mandatory.
    Form Number: ONRR-2014, ONRR-4054.
    Type of Review: Revision of a currently approved collection.
    Respondents/Affected Public: Businesses.
    Total Estimated Number of Annual Respondents: 3,490 oil, gas, and 
geothermal reporters.
    Total Estimated Number of Annual Responses: 12,827,063 lines of 
data.
    Estimated Completion Time per Response: Varies between 1 and 7 
minutes per line, depending on the activity. The average completion 
time is 1.72 minutes per line. The average completion time is 
calculated by first multiplying the estimated annual burden hours 
(369,379) by 60 to obtain the total annual burden minutes. Then the 
total annual burden minutes (22,162,740) is divided by the estimated 
annual number of lines submitted (12,827,063).
    Total Estimated Number of Annual Burden Hours: 369,379.
    Respondent's Obligation: Mandatory.
    Frequency of Collection: Monthly.
    Total Estimated Annual Non-Hour Burden Cost: ONRR identified no 
``non-hour cost'' burden associated with this information collection.
3. OMB Control Number 1012-0006 (ONRR)
    The OMB has reviewed and approved information collections for 
ONRR's suspensions pending appeal and bonding throughout the rest of 
Indian country, which are assigned OMB Control No. 1012-0006. ONRR is 
proposing to renew information collection 1012-0006 with revisions to 
provide for such collections within the Osage Mineral Estate. The 
following ONRR suspensions pending appeal and bonding requirements in 
the proposed rule require OMB's approval:

----------------------------------------------------------------------------------------------------------------
               Section(s)                    Proposed revision(s) to OMB 1012-0006       OMB 1012-0006 Form(s)
----------------------------------------------------------------------------------------------------------------
226.179(b)(2)...........................  A party who appeals an order regarding the  ONRR 4435--Administrative
                                           payment and reporting of royalties, or      Appeal Bond.
                                           other payments due, may suspend            ONRR 4436--Letter of
                                           compliance with such order by submitting    Credit.
                                           an ONRR-specified surety instrument        ONRR 4437--Assignment of
                                           within 60 days after receiving the Order    Certificate of Deposit.
                                           or Notice of Order.
226.180(a)..............................  Any other person, including a designee,     None.
                                           payor, or affiliate, may post a bond or
                                           other surety instrument on behalf of an
                                           appellant. If such person is assuming an
                                           appellant's responsibility, they must
                                           notify ONRR in writing of such
                                           assumption. Covered under burden for Sec.
                                             226.179(b)(2).
226.182(b)(2)...........................  ONRR will suspend an obligation to comply   None.
                                           with an order if the amount under appeal
                                           is $1,000 or more if the appellant
                                           submits an ONRR-specified surety
                                           instrument within the required timeframe.
                                           Covered under burden for Sec.
                                           226.179(b)(2).
226.185(c)..............................  An appellant whose appeal is not decided    None.
                                           within one year from the filing date must
                                           increase the surety amount to cover
                                           additional estimated interest for another
                                           one-year period and continue such
                                           increases annually. Covered under burden
                                           for Sec.   226.179(b)(2).
----------------------------------------------------------------------------------------------------------------

    Title of Collection: Suspensions Pending Appeal and Bonding.
    OMB Control Number: 1012-0006.
    Revision: Under the 1906 Act, the BIA is required to administer oil 
and gas leasing and development of the Osage Mineral Estate. The 
proposed rule would allow BIA to transfer the royalty and production 
reporting and compliance functions for the Osage Mineral Estate to 
ONRR. ONRR would perform the specified IC activities in 25 CFR part 226 
to carry out enforcement and compliance actions for the Osage Mineral 
Estate.
    Form Number: ONRR-4435, ONRR-4436, and ONRR-4437.
    Type of Review: Revision of a currently approved collection.
    Respondents/Affected Public: Businesses.
    Total Estimated Number of Annual Respondents: 107.
    Total Estimated Number of Annual Responses: 107.
    Estimated Completion Time per Response: The time per response is 
120 mins. The average completion time is calculated by first 
multiplying the estimated annual burden hours (214 burden hours) by 60 
to obtain the total annual burden minutes. Then the total annual burden 
minutes (12,840) is divided by the estimated annual responses (107).
    Total Estimated Number of Annual Burden Hours: 214.
    Respondent's Obligation: Mandatory.
    Frequency of Collection: Annually and on occasion.
    Total Estimated Annual Non-Hour Burden Cost: There are no 
additional recordkeeping costs associated with this information 
collection. However, ONRR estimates 5 appellants per year will pay a 
$50 fee to obtain credit data from a business information or credit 
reporting service, which is a total non-hour cost burden of $250 per 
year (5 appellants per year x $50 = $250).

J. National Environmental Policy Act

    This proposed rule does not constitute a major Federal action 
significantly affecting the quality of the human environment under the 
National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321, et 
seq. Therefore, this proposed rule is categorically excluded from 
further review under 43 CFR 46.210(i) because these are regulations 
``whose environmental effects are too broad, speculative, or 
conjectural to lend themselves to meaningful analysis and will later be 
subject to the NEPA review process either collectively or case by 
case.'' No extraordinary circumstances exist that require greater NEPA 
review.

K. Effects on the Energy Supply (Executive Order 13211)

    This proposed rule is not a significant energy action under the 
definition in Executive Order 13211. A statement of Energy Effects is 
not required.

L. Clarity of This Regulation (Executive Orders 12866, 12988, and 
13563)

    We are required by Executive Orders 12866, 12988, and 13563 and by 
the

[[Page 2452]]

Presidential Memorandum of June 1, 1988, to write all rules in plain 
language. This means that each rule must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments using one of the methods listed in the ADDRESSES section. To 
better help the BIA revise the rule, your comments should identify the 
numbers of the sections or paragraphs that you find unclear and specify 
which sections or sentences are too long, the sections where you 
believe lists or tables would be useful.

List of Subjects in 25 CFR Part 226

    Administrative practice and procedure, Environmental protection, 
Incorporation by reference, Indians-lands, Mineral royalties, Oil and 
gas exploration, Oil and gas measurement, Penalties, Reporting and 
recordkeeping requirements.

    For the reasons stated in the preamble, the Bureau of Indian 
Affairs proposes to revise 25 CFR part 226 as follows:

PART 226--MINING OF THE OSAGE MINERAL ESTATE FOR OIL AND GAS

Subpart A--General
Sec.
226.0 Incorporation by reference (IBR).
226.1 Definitions.
226.2 Authorities that govern oil and gas activities within the 
Osage Mineral Estate.
226.3 Authority and responsibility of the Superintendent of the 
Osage Agency.
226.4 Authority and responsibility of the Office of Natural 
Resources Revenue (ONRR).
226.5 Orders and notices.
226.6 Service of official correspondence.
226.7 Forms.
226.8 Acceptable forms of payment.
226.9 Environmental reviews and cultural surveys.
226.10 Information collection.
226.11 Public availability of information.
Subpart B--Acquiring a Lease

Authorized Procedures

226.12 Procedures the Osage Minerals Council may use to enter into a 
lease.

Competitive Leases

226.13 Advertisement of a lease sale.
226.14 Nominating lands for a lease sale.
226.15 Publication of a Notice of Lease Sale.
226.16 Bidding system.
226.17 Award of leases.

Non-Competitive Leases

226.18 Submitting an offer to lease.
226.19 Acceptance of an offer to lease.

Lease Terms

226.20 Types of leases.
226.21 Primary term of leases.
226.22 Effect of changes in current regulations on existing leases.
226.23 U.S. Government employees may not acquire leases.
Subpart C--Cooperative Agreements and Unitization
226.24 Cooperative agreements.
226.25 Unit development plans.
Subpart D--Transferring a Lease by Assignment
226.26 Assignment of record title interest in a lease.
226.27 Qualifications of the assignee.
226.28 Effective date of transfer.
226.29 Effect of assignment on the assignor's liability under the 
lease.
226.30 Effect of assignment on the assignee's liability under the 
lease.
226.31 Overriding royalty agreements.
226.32 Drilling contracts.
Subpart E--Ending a Lease
226.33 Surrender of all or any portion of a lease.
226.34 Termination of a lease by operation of law.
Subpart F--Rental and Royalty

Rental Obligations

226.35 Annual rental requirements.

Royalty Obligations

226.36 Royalty rate for oil.
226.37 Calculating the value of oil for royalty purposes.
226.38 Gravity adjustment for oil.
226.39 Royalty rate for gas.
226.40 Calculating the value of gas for royalty purposes.
226.41 Minimum royalty.
226.42 Royalty-in-kind.
226.43 Royalty payments.
226.44 Royalty payment contracts and division orders.
226.45 Royalty reports.
226.46 Requirements for royalty, rental, and payment records.
226.47 Right of the U.S. Government to purchase oil.

Audits

226.48 Audits and reviews.
Subpart G--Bonds

Lease Bonds

226.49 Grandfathering of existing bonds.
226.50 Bond obligations.
226.51 Individual well bond requirements.
226.52 Countywide and nationwide bond requirements.
226.53 Authorization to increase the required bond amount.
226.54 Bond forfeiture.
226.55 Termination of the period of liability and release of bonds.

Geophysical Exploration Bonds

226.56 Geophysical exploration bond requirements.
226.57 Bond forfeiture.
226.58 Termination of the period of liability and release of bonds.
Subpart H--Operations

General Requirements

226.59 Conduct of operations.
226.60 Inspection of operations.

Commencement of Operations

226.61 No operations may commence prior to approval of a lease or 
geophysical exploration permit.
226.62 Prior authorization required to commence operations on trust 
or restricted lands.
226.63 Notice and information to be given to surface owners prior to 
commencement of operations.
226.64 Payment of commencement money and tank siting fees to the 
surface owner.

Drilling, Workover, and Well Abandonment Operations

226.65 Use of surface lands and water for operations.
226.66 Drilling operations.
226.67 Well control.
226.68 Use of gas for artificial lifting of oil.
226.69 Workover operations.
226.70 Requirements for operations in Hydrogen Sulfide 
(H2S) areas.
226.71 Surveys, samples, and tests.
226.72 Temporary abandonment.
226.73 Permanent plugging and abandonment operations.
226.74 Well records and reports.
226.75 Well and facility identification.
226.76 Pollution prevention.
226.77 Storage and disposal of fluids.
226.78 Removal of fire hazards.

Geophysical Exploration Operations

226.79 Applying for a geophysical exploration permit.
226.80 Commencement of operations.
226.81 Records and reports.

Settlement of Surface Damages

226.82 Lessee or permittee required to settle surface damages.
226.83 Procedure for settlement of surface damages.
Subpart I--Production and Site Security

General Requirements

226.84 Production obligations.
226.85 Production reporting.
226.86 Site facility diagrams.
226.87 Assignment of facility measurement point (FMP) numbers.
226.88 Requirements for production records.
226.89 Easements for access to wells located off-lease.

Waste Prevention

226.90 Prevention of waste.
226.91 Royalty on lost or wasted production.

Drainage Requirements

226.92 Prevention of drainage.
226.93 Compensatory royalty for drainage.

[[Page 2453]]

Site Security

226.94 Storage and sales facilities--seals.
226.95 Oil measurement system components--seals.
226.96 Removing production from tanks for sale and transportation by 
truck.
226.97 Documentation required for transportation of oil and gas.
226.98 Water draining operations.
226.99 Hot oiling, clean-up, and completion operations.
226.100 Seal records.
226.101 Requirements for off-lease measurement of production.
226.102 Report of spills, theft, mishandling of production, 
accidents, or fires.
Subpart J--Oil Measurement
226.103 General requirements.
226.104 Timeframes for compliance.
226.105 [Reserved]
226.106 Specific measurement performance requirements.
226.107 Tank gauging--general requirements.
226.108 Tank gauging--procedures.
226.109 LACT system--general requirements.
226.110 LACT system--components and operating requirements.
226.111 Coriolis measurement systems (CMS)--general requirements and 
components.
226.112 Coriolis meter--operating requirements.
226.113 Meter proving requirements.
226.114 Run tickets.
226.115 Oil measurement by alternate methods.
226.116 Determination of oil volumes by methods other than 
measurement.
Subpart K--Gas Measurement
226.117 General requirements.
226.118 Timeframes for compliance.
226.119 [Reserved]
226.120 Specific performance requirements.
226.121 Flange-tapped orifice plates (primary devices).
226.122 Mechanical recorder (secondary device).
226.123 Verification and calibration of mechanical recorder.
226.124 Integration statements.
226.125 Electronic gas measurement (secondary and tertiary device).
226.126 Verification and calibration of electronic gas measurement 
systems.
226.127 Flow rate, volume, and average value calculation.
226.128 Logs and records.
226.129 Gas sampling and analysis.
226.130 Sampling probe and tubing.
226.131 Spot samples--general requirements.
226.132 Spot samples--allowable methods.
226.133 Spot samples--frequency.
226.134 Composite sampling methods.
226.135 On-line gas chromatographs.
226.136 Gas chromatographs.
226.137 Components to analyze.
226.138 Gas analysis report requirements.
226.139 Effective date of a spot or composite gas sample.
226.140 Calculation of heating value and volume.
226.141 Reporting of heating value and volume.
Subpart L--Tribal and Royalty-Free Use of Production

Tribal Use of Gas Production

226.142 Use of gas by the Osage Nation and Tribe members.
226.143 Royalty on gas furnished for Tribal use.

Royalty-Free Use of Lease Production

226.144 Production on which no royalty is due.
226.145 Uses of production on a lease or unit that do not require 
the Superintendent's prior approval of royalty-free treatment.
226.146 Uses of production on a lease or unit that require the 
Superintendent's prior approval of royalty-free treatment.
226.147 Uses of production moved off the lease or unit that do not 
require the Superintendent's prior approval of royalty-free 
treatment.
226.148 Uses of production moved off the lease or unit that require 
the Superintendent's prior approval of royalty-free treatment.
226.149 Measurement or estimation of royalty-free volumes of oil or 
gas.
226.150 Ownership of equipment or facilities.
226.151 Requesting approval of royalty-free treatment for volumes 
used.
Subpart M--Venting and Flaring
226.152 General requirements.
226.153 Gas-well gas.
226.154 Oil-well gas.
226.155 Limitations on venting gas.
226.156 Authorized venting and flaring of gas.
226.157 Measurement and reporting of volumes of gas vented or 
flared.
Subpart N--Assessments and Penalties

Lease Management Assessments and Civil Penalties

226.158 Remedies for violations of lease or permit terms and 
conditions, regulations, orders, and notices.
226.159 Immediate assessments for violations of certain operating 
regulations.
226.160 Other assessments.
226.161 Civil penalties with a period to correct.
226.162 Civil penalties without a period to correct.
226.163 Penalty amount.
226.164 Shut-in actions.
226.165 Lease or permit cancellation.
226.166 Payment of assessments and civil penalties.

Royalty Management Assessments and Civil Penalties

226.167 Remedies for violations of lease or permit terms and 
conditions, regulations, orders, and notices.
226.168 Assessments for incorrect or late reports and failure to 
report.
226.169 Assessments for failure to submit payment amount indicated 
on a form or bill document or to provide adequate information.
226.170 Civil penalties with a period to correct.
226.171 Civil penalties without a period to correct.
226.172 Penalty amount.
226.173 Payment of civil assessments and civil penalties.
226.174 Collection of unpaid civil penalties.
226.175 Debt collection and administrative offset.

Criminal Penalties

226.176 Penalties for filing fraudulent reports.
Subpart O--Appeals

Appeals of BIA Decisions

226.177 Procedure for filing an administrative appeal of a decision, 
order, or notice of the Superintendent.

Appeals of ONRR Decisions

226.178 Procedures for filing an administrative appeal of an order 
from ONRR.
226.179 Suspension of compliance with an ONRR order.
226.180 Requirements for posting a bond or other surety on behalf of 
appellant.
226.181 Suspension of obligation to comply with an ONRR order due to 
judicial review in federal court.
226.182 ONRR's collection of bonds and other surety instruments.
226.183 ONRR bond-approving officer's determination of surety amount 
not subject to appeal.
226.184 Standards for ONRR-specified surety instruments.
226.185 ONRR's determination of bond or surety instrument amount.

Appendix A Appendix A to Part 226--Table of Atmospheric Pressures


    Authority:  Sec. 3, Pub. L. 59-321, 34 Stat. 543; Secs. 1-2, 
Pub. L. 66-360, 41 Stat. 1249; Secs. 1-2, Pub. L. 70-919, 45 Stat. 
1478; Sec. 3, Pub. L. 75-711, 52 Stat. 1034; Pub. L. 81-548, 65 
Stat. 215; Pub. L. 88-632, 78 Stat. 1008; Secs. 2, 4, Pub. L. 95-
496, 92 Stat. 1660.

Subpart A--General


Sec.  226.0  Incorporation by reference (IBR).

    Certain material is incorporated by reference into this part with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than those 
specified in this section, the Bureau of Indian Affairs (BIA) must 
publish a document in the Federal Register, and the material must be 
available to the public. All approved incorporation by reference (IBR) 
material is available for inspection at the BIA and at the National 
Archives and Records Administration (NARA). To inspect the material at 
BIA, contact: the BIA Osage Agency, 513 Grandview Avenue, Pawhuska, OK 
74056; phone 918-287-5700. For information on the availability of this 
material at NARA,

[[Page 2454]]

visit www.archives.gov/federal-register/cfr/ibr-locations.html or email 
[email protected]. The material may be obtained from the following 
sources:
    (a) American Petroleum Institute (API), 200 Massachusetts Avenue 
NW, Suite 1100, Washington, DC 20005; phone: 202-682-8000; website: 
https://www.api.org.
    (1) API Manual of Petroleum Measurement Standards (MPMS), Chapter 
2--Tank Calibration, Section 2A--Measurement and Calibration of Upright 
Cylindrical Tanks by the Manual Tank Strapping Method; First Edition, 
February 1995; Reaffirmed August 2017 (``API 2.2A''); IBR approved for 
Sec.  226.107(f).
    (2) API MPMS Chapter 2--Tank Calibration, Section 2B--Calibration 
of Upright Cylindrical Tanks Using the Optical Reference Line Method; 
First Edition, March 1989; Reaffirmed, April 2019; Addendum 1, October 
2019 (``API 2.2B''); IBR approved for Sec.  226.107(f).
    (3) API MPMS Chapter 2--Tank Calibration, Section 2C--Calibration 
of Upright Cylindrical Tanks Using the Optical-Triangulation Method; 
First Edition, January 2002; Reaffirmed April 2019 (``API 2.2C''); IBR 
approved for Sec.  226.107(f).
    (4) API MPMS Chapter 3--Tank Gauging, Section 1A--Standard Practice 
for the Manual Gauging of Petroleum and Petroleum Products; Third 
Edition, August 2013; Reaffirmed December 2018 (``API 3.1A''); IBR 
approved for Sec.  226.108(b).
    (5) API MPMS Chapter 3--Tank Gauging, Section 1B--Standard Practice 
for Level Measurement of Liquid Hydrocarbons in Stationary Tanks by 
Automatic Tank Gauging; Third Edition, April 2018 (``API 3.1B''); IBR 
approved for Sec.  226.108(b).
    (6) API MPMS Chapter 3--Tank Gauging, Section 6--Measurement of 
Liquid Hydrocarbons by Hybrid Tank Measurement Systems; First Edition, 
February 2001; Errata September 2005; Reaffirmed January 2017 (``API 
3.6''); IBR approved for Sec.  226.108(b).
    (7) API MPMS Chapter 4--Proving Systems, Section 1--Introduction; 
Third Edition, February 2005; Reaffirmed June 2014 (``API 4.1''); IBR 
approved for Sec.  226.113(c).
    (8) API MPMS Chapter 4--Proving Systems, Section 2--Displacement 
Provers; Third Edition, September 2003; Reaffirmed March 2011, Addendum 
February 2015 (``API 4.2''); IBR approved for Sec.  226.113(b) and (c).
    (9) API MPMS Chapter 4--Proving Systems, Section 5--Master-Meter 
Provers; Fourth Edition, June 2016, (``API 4.5''); IBR approved for 
Sec.  226.113(b).
    (10) API MPMS Chapter 4--Proving Systems, Section 6--Pulse 
Interpolation; Second Edition, May 1999; Errata April 2007; Reaffirmed 
October 2013 (``API 4.6''); IBR approved for Sec.  226.113(c).
    (11) API MPMS Chapter 4--Proving Systems, Section 8--Operation of 
Proving Systems; Second Edition, September 2013 (``API 4.8''); IBR 
approved for Sec.  226.113(b).
    (12) API MPMS Chapter 4--Proving Systems, Section 9--Methods of 
Calibration for Displacement and Volumetric Tank Provers, Part 2--
Determination of the Volume of Displacement and Tank Provers by the 
Waterdraw Method of Calibration; First Edition, December 2005; 
Reaffirmed July 2015 (``API 4.9.2''); IBR approved for Sec.  
226.113(b).
    (13) API MPMS Chapter 5--Metering, Section 6--Measurement of Liquid 
Hydrocarbons by Coriolis Meters; First Edition, October 2002; 
Reaffirmed November 2013 (``API 5.6''); IBR approved for Sec. Sec.  
226.111(d); 226.113(i) and (j).
    (14) API MPMS Chapter 6--Metering Assemblies, Section 1--Lease 
Automatic Custody Transfer (LACT) Systems; Second Edition, May 1991; 
Reaffirmed May 2012 (``API 6.1''); IBR approved for Sec.  226.110(a) 
and (b).
    (15) API MPMS Chapter 7--Temperature Determination, Section 1--
Liquid-in-glass Thermometers, Second Edition, August 2017 (``API 
7.1''); IBR approved for Sec.  226.108(b).
    (16) API MPMS Chapter 7--Temperature Determination, Section 2--
Portable Electronic Thermometers; Third Edition, May 2018 (``API 
7.2''); IBR approved for Sec.  226.108(b).
    (17) API MPMS Chapter 7--Temperature Determination, Section 4--
Dynamic Temperature Measurement, Second Edition, January 2018 (``API 
7.4''); IBR approved for Sec.  226.110(b).
    (18) API MPMS Chapter 8--Sampling, Section 1--Standard Practice for 
Manual Sampling of Petroleum and Petroleum Products; Fourth Edition, 
October 2013 (``API 8.1''); IBR approved for Sec. Sec.  226.108(b); 
226.113(i).
    (19) API MPMS Chapter 8--Sampling, Section 2--Standard Practice for 
Automatic Sampling of Petroleum and Petroleum Products; Fourth Edition, 
November 2016 (``API 8.2''); IBR approved for Sec. Sec.  226.110(b); 
226.113(i).
    (20) API MPMS Chapter 8--Sampling, Section 3--Standard Practice for 
Mixing and Handling of Liquid Samples of Petroleum and Petroleum 
Products; First Edition, October 1995; Reaffirmed, March 2015 (``API 
8.3''); IBR approved for Sec. Sec.  226.110(b); 226.113(i).
    (21) API MPMS Chapter 9--Density Determination, Section 1--Standard 
Test Method for Density, Relative Density, or API Gravity of Crude 
Petroleum and Liquid Petroleum Products by Hydrometer Method; Third 
Edition, December 2012; Reaffirmed May 2017 (``API 9.1''); IBR approved 
for Sec. Sec.  226.108(b); 226.110(b).
    (22) API MPMS Chapter 9--Density Determination, Section 2--Standard 
Test Method for Density or Relative Density of Light Hydrocarbons by 
Pressure Hydrometer; Third Edition, December 2012; Reaffirmed May 2017 
(``API 9.2''); IBR approved for Sec. Sec.  226.108(b); 226.110(b).
    (23) API MPMS Chapter 9--Density Determination, Section 3--Standard 
Test Method for Density, Relative Density, and API Gravity of Crude 
Petroleum and Liquid Petroleum Products by Thermohydrometer Method; 
Third Edition, December 2012; Reaffirmed May 2017 (``API 9.3''); IBR 
approved for Sec. Sec.  226.108(b); 226.110(b).
    (24) API MPMS Chapter 10--Sediment and Water, Section 4--
Determination of Water and/or Sediment in Crude Oil by the Centrifuge 
Method (Field Procedure); Fourth Edition, October 2013; Errata March 
2015 (``API 10.4''); IBR approved for Sec. Sec.  226.108(b); 
226.110(b).
    (25) API MPMS Chapter 11--Physical Properties Data, Section 1--
Temperature and Pressure Volume Correction Factors for Generalized 
Crude Oils, Refined Products and Lubricating Oils; May 2004, Addendum 1 
September 2007, Addendum 2 May 2019; Reaffirmed August 2012 (``API 
11.1''); IBR approved for Sec. Sec.  226.109(g); 226.110(b); 
226.111(e); 226.114(a).
    (26) API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 2--
Measurement Tickets; Third Edition, June 2003; Reaffirmed February 2016 
(``API 12.2.2''); IBR approved for Sec.  226.110(b).
    (27) API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 3--Proving 
Report; First Edition, October 1998; Reaffirmed May 2014 (``API 
12.2.3''); IBR approved for Sec.  226.113(c) and (j).
    (28) API MPMS Chapter 12--Calculation of Petroleum Quantities, 
Section 2--Calculation of Petroleum Quantities Using Dynamic 
Measurement Methods and Volumetric Correction Factors, Part 4--
Calculation of Base Prover Volumes by the Waterdraw

[[Page 2455]]

Method; First Edition, December 1997; Reaffirmed September 2014 (``API 
12.2.4''); IBR approved for Sec.  226.113(b).
    (29) API MPMS Chapter 13--Statistical Aspects of Measuring and 
Sampling, Section 3--Measurement Uncertainty; Second Edition, December 
2017 (``API 13.3''); IBR approved for Sec.  226.106(a).
    (30) API Manual of Petroleum Measurement Standards (MPMS) Chapter 
14--Natural Gas Fluids Measurement, Section 1--Collecting and Handling 
of Natural Gas Samples for Custody Transfer; Seventh Edition, May 2016; 
Addendum August 2017; Errata August 2017 (``API 14.1''); IBR approved 
for Sec. Sec.  226.130(b) and (c); 226.131(c); 226.132(b).
    (31) API MPMS Chapter 14--Natural Gas Fluids Measurement, Section 
3--Orifice Metering of Natural Gas and Other Related Hydrocarbon 
Fluids--Concentric, Square-edged Orifice Meters, Part 1--General 
Equations and Uncertainty Guidelines; Fourth Edition, September 2012; 
Errata July 2013; Reaffirmed September 2017 (``API 14.3.1''); IBR 
approved for Sec. Sec.  226.106(a); 226.120(a).
    (32) API MPMS Chapter 14--Natural Gas Fluids Measurement, Section 
3--Orifice Metering of Natural Gas and Other Related Hydrocarbon 
Fluids--Concentric, Square-edged Orifice Meters, Part 2--Specification 
and Installation Requirements; Fifth Edition, March 2016; Errata 1, 
March 2017; Errata 2, January 2019 (``API 14.3.2''); IBR approved for 
Sec.  226.121(b) through (f), (h), (i), and (l).
    (33) API MPMS Chapter 14--Natural Gas Fluids Measurement, Section 
3--Orifice Metering of Natural Gas and Other Related Hydrocarbon 
Fluids--Concentric, Square-edged Orifice Meters, Part 3--Natural Gas 
Applications; Fourth Edition, November 2013 (``API 14.3.3''); IBR 
approved for Sec. Sec.  226.124(b); 226.127(a).
    (34) API MPMS, Chapter 14--Natural Gas Fluids Measurement, Section 
5--Calculation of Gross Heating Value, Relative Density, 
Compressibility and Theoretical Hydrocarbon Liquid Content for Natural 
Gas Mixtures for Custody Transfer; Third Edition, January 2009; 
Reaffirmed November 2020 (``API 14.5''); IBR approved for Sec. Sec.  
226.138(c); 226.140(a).
    (35) API MPMS Chapter 18--Custody Transfer, Section 1--Measurement 
Procedures for Crude Oil Gathered from Small Tanks by Truck; Third 
Edition, May 2018 (``API 18.1''); IBR approved for Sec.  226.108(b).
    (36) API MPMS Chapter 21--Flow Measurement Using Electronic 
Metering Systems, Section 1--Electronic Gas Measurement; Second 
Edition, February 2013 (``API 21.1''); IBR approved for Sec. Sec.  
226.125(a) and (g); 226.126(a), (c), and (d); 226.127(c); 226.128(a) 
through (d).
    (37) API MPMS Chapter 21--Flow Measurement Using Electronic 
Metering Systems, Section 2--Electronic Liquid Volume Measurement Using 
Positive Displacement and Turbine Meters; First Edition, June 1998; 
Reaffirmed October 2016 (``API 21.2''); IBR approved for Sec. Sec.  
226.110(b); 226.111(e); 226.112(g).
    (38) API Recommended Practice (RP) 12R1, Setting, Maintenance, 
Inspection, Operation and Repair of Tanks in Production Service; Fifth 
Edition, August 1997; Reaffirmed April 2008; Addendum 1, December 2017 
(``API RP 12R1''); IBR approved for Sec.  226.107(b).
    (39) API RP 2556, Correction Gauge Tables for Incrustation; Second 
Edition, August 1993; Reaffirmed November 2013 (``API RP 2556''); IBR 
approved for Sec.  226.107(f).
    (b) American Gas Association (AGA), 400 North Capitol Street NW, 
Suite 450, Washington, DC 20001; phone: 202-824-7000; website: https://www.aga.org.
    (1) AGA Report No. 3, Orifice Metering of Natural Gas and Other 
Related Hydrocarbon Fluids, Second Edition, September 1985 (``AGA 
Report No. 3''); IBR approved for Sec.  226.124(b).
    (2) AGA Transmission Measurement Committee Report No. 8, 
Compressibility Factors of Natural Gas and Other Related Hydrocarbon 
Gases; Second Edition, November 1992 (``AGA Report No. 8''); IBR 
approved for Sec. Sec.  226.127(a); 226.138(d).
    (c) Gas Processors Association (GPA), 6526 E. 60th Street, Tulsa, 
OK 74145; phone 918-493-3872; website: https://www.gpamidstream.org.
    (1) GPA Midstream Standard 2166-17, Obtaining Natural Gas Samples 
for Analysis by Gas Chromatography; Reaffirmed 2017 (``GPA 2166-17''); 
IBR approved for Sec. Sec.  226.131(c) and (d); 226.132(a); 226.135(a).
    (2) GPA Midstream Standard 2261-20, Analysis for Natural Gas and 
Similar Gaseous Mixtures by Gas Chromatography; Revised 2020 (``GPA 
2261-20''); IBR approved for Sec.  226.136(a) and (c).
    (3) GPA Midstream Standard 2198-16, Selection, Preparation, 
Validation, Care and Storage of Natural Gas and Natural Gas Liquids 
Reference Standard Blends; Revised 2016 (``GPA 2198-16''); IBR approved 
for Sec.  226.136(c).


Sec.  226.1   Definitions.

    (a) As used in this part, the term:
    Alarm log means a log for recording any system alarm, user-defined 
alarm, or error conditions (such as out-of-range temperature or 
pressure) that occur. This includes a description of each alarm 
condition and the times the condition occurred and cleared.
    Appropriate valve means those valves that provide access to 
production before it is measured for sales and that are subject to the 
sealing requirements set forth in this part.
    Area ratio means the smallest unrestricted area at the primary 
device divided by the cross-sectional area of the meter tube. For 
example, the area ratio (Ar) of an orifice plate is the area 
of the orifice bore (Ad) divided by the area of the meter 
tube (AD). For an orifice plate with a bore diameter (d) of 
1.000 inches in a meter tube with an inside diameter (D) of 2.000 
inches, the area ratio is 0.25 and is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA23.006

    As-found means the reading of a mechanical or electronic transducer 
when compared to a certified test device, prior to making any 
adjustments to the transducer.

[[Page 2456]]

    As-left means the reading of a mechanical or electronic transducer 
when compared to a certified test device after adjusting the 
transducer, but prior to returning the transducer to service.
    Audit means a review of production reporting, royalty reporting, or 
payment activities of lessees, designees, or other persons or entities 
who report production or pay royalties, rents, bonuses, or other 
revenues on leases or properties where a lease, or portion of a lease, 
is committed to a cooperative agreement.
    Automatic ignition system means an automatic ignitor and, where 
needed to ensure continuous combustion, a continuous pilot flame.
    Averaging period means the previous 12 months or life of the meter, 
whichever is shorter. For an FMP that measures production from a newly 
drilled well, the averaging period excludes production from the well 
that occurred during or prior to the first full month of production.
    Barrel (bbl) means 42 standard United States gallons.
    Beta (or diameter) ratio means the reference inside diameter 
(measured inside diameter corrected to a reference temperature of 68 
[deg]F) of the orifice bore divided by the reference inside diameter of 
the meter tube. This is also referred to as a diameter ratio.
    Bias means a shift in the mean value of a set of measurements away 
from the true value of what is being measured.
    Business day means any day Monday through Friday, excluding 
weekends and Federal holidays.
    Bypass means any piping or equipment used at an FMP to go around or 
otherwise avoid a meter or other measurement device, or any component 
thereof, to allow oil or gas to flow without accountability. Equipment 
that allows the changing of the orifice plate of a gas meter without 
bleeding the pressure off the gas meter run (e.g., senior fitting) is 
not a bypass.
    Capture means the physical containment of natural gas for 
transportation to market or productive use of natural gas and includes 
injection and royalty-free on-site uses pursuant to the regulations in 
this part.
    Calendar day means all days in a month, including weekends and 
Federal holidays.
    Composite meter factor means a meter factor corrected from normal 
operating pressure to base pressure. The composite meter factor is 
determined by proving operations where the pressure is considered 
constant during the measurement period between provings. This 
definition applies to liquid meter provings only.
    Configuration log means a record that contains all selected flow 
parameters used in the generation of a quantity transaction record.
    Cooperative agreement means a binding legal agreement between two 
or more parties for the development or operation of a designated area 
as a single unit without regard to separate ownership of the leased 
lands included in the agreement. Such cooperative agreements include, 
but are not limited to, unit agreements and communitization agreements.
    Coriolis measurement system (CMS) means a metering system using a 
Coriolis meter in conjunction with a tertiary device, pressure 
transducer, and temperature transducer to derive and report gross 
standard oil volume. A CMS system provides real-time, on-line 
measurement of oil.
    Deleterious substance means any chemical, saltwater, oil field 
brine, waste oil, waste emulsified oil, basic sediment, mud, or other 
injurious substance produced or used in the drilling, development, 
production, transportation, refining, and processing of oil and gas.
    Director means the Director of ONRR, the Director's authorized 
representative acting under delegated authority, or such other person 
as the Director may delegate to fulfill responsibilities and exercise 
authorities under this part.
    Discharge coefficient means an empirically derived correction 
factor that is applied to the theoretical differential flow equation to 
calculate a flow rate that is within stated uncertainty limits.
    Drainage means the migration of hydrocarbons, inert gases, or 
associated resources caused by production from other wells.
    Effectively sealed means sealed in such a manner that the sealed 
component cannot be accessed, moved, or altered without breaking the 
seal.
    Element range means the difference between the minimum and maximum 
value that the element of a mechanical recorder (e.g., differential-
pressure bellows, static pressure element, temperature element) is 
designed to measure.
    Ephemeral stream or water source means a stream or water source 
that only flows in direct response to precipitation and whose channel 
is always above the water table.
    Escape rate means the maximum volume of gas determined to be 
available for escape (Q), calculated as follows:
    (1) For production facilities, the maximum daily rate of gas 
produced through that facility or the best estimate thereof;
    (2) For oil wells, the producing gas/oil ratio multiplied by the 
maximum daily production rate or the best estimate thereof; and
    (3) For gas wells, the current daily absolute open flow rate 
against atmospheric pressure.
    Event log means an electronic record of all exceptions and changes 
to the flow parameters contained within the configuration log that have 
an impact on a quantity transaction record.
    Facility measurement point (FMP) means a point where oil or gas 
produced from a lease is measured and such measurement affects 
calculation of the volume or quality of production on which royalty is 
owed. Each individual meter installation (including its primary, 
secondary, and tertiary devices) and tank battery is a separate FMP.
    Free water means the measured volume of water that is present in a 
container and that is not in suspension in the contained liquid at 
observed temperature.
    Gas means any fluid, either combustible or non-combustible, 
hydrocarbon or non-hydrocarbon, which is extracted from a reservoir and 
has neither independent shape nor volume, but tends to expand 
indefinitely, and which exists in a gaseous or rarefied state under 
standard temperature and pressure conditions.
    Gas-to-oil ratio (GOR) means the ratio of gas to oil in the 
production stream expressed in standard cubic feet of gas per barrel of 
oil.
    Gas plant products means separate marketable elements, compounds, 
or mixtures, whether in liquid, gaseous, or solid form, resulting from 
processing gas. This does not include residue gas.
    Gas well means a well that produces natural gas that is not 
associated with oil at the time of well completion or for which the 
energy equivalent of the gas produced, including its entrained 
liquefiable hydrocarbons, exceeds the energy equivalent of the oil 
produced by at least 15,000 standard cubic feet for each barrel of oil 
produced at the time of well completion.
    Geophysical exploration means activity relating to the search for 
evidence of oil and gas which requires physical presence upon surface 
lands and may result in damage to the lands or resources located 
thereon. This includes, but is not limited to, geophysical operations, 
construction of roads and trails, cross-country transit of vehicles, 
and drilling operations to place explosive charges, where

[[Page 2457]]

approved. This does not include drilling for oil and gas.
    Gross proceeds means the total monies and other consideration 
accruing to a lessee for the disposition of the oil, gas, or other 
marketable products produced.
    Gross standard volume means a volume of oil corrected to base 
pressure and temperature and includes meter factor, as applicable.
    Heating value means the gross heat energy released by the complete 
combustion of one standard cubic foot of gas at 14.73 psia and 60 
[deg]F.
    High-volume FMP means any gas FMP that measures more than 200 Mcf/
day, but less than 1,000 Mcf/day, over the averaging period. This 
definition only applies to gas FMPs; it does not apply to oil FMPs on 
an equivalent-gas basis.
    Indicated volume means the uncorrected volume indicated by the 
meter in a LACT system or the Coriolis meter in a CMS. For a positive 
displacement meter, the indicated volume is represented by the non-
resettable totalizer on the meter head. For Coriolis meters, the 
indicated volume is the uncorrected (without the meter factor) mass of 
liquid divided by the density.
    Innage gauge means the level of a liquid in a tank, measured from 
the datum plate or tank bottom to the surface of the liquid.
    Intermittent stream or water source means a stream or water source 
flowing only at certain times of the year when it receives water from 
springs or other surface sources.
    Knowingly or willfully means an act, or failure to act, that is 
committed with actual knowledge, deliberate ignorance, or reckless 
disregard of the facts surrounding the event or violation; it requires 
no proof of specific intent to defraud. The knowing or willful nature 
of conduct may be established by plain indifference or reckless 
disregard of the terms and conditions of the lease or permit or 
applicable laws, regulations, orders, or notices. A consistent pattern 
of performance, or failure to perform, may be sufficient to establish 
the knowing or willful nature of the conduct. Conduct that is regarded 
as knowing or willful is not accidental, nor is it mitigated by the 
belief that the conduct is reasonable or legal.
    Lease means any contract approved by the United States under the 
Act of June 28, 1906, Public Law 59-321, 34 Stat. 539, as amended, that 
authorizes exploration for, or the extraction and removal of, oil and 
gas from the Osage Mineral Estate.
    Lease automatic custody transfer (LACT) system means a system of 
components designed for the unattended custody transfer of oil produced 
from a lease or unit to the transporting carrier. The system must 
determine the net standard volume and quality and provide for safe and 
tamper-proof operations.
    Legal description means the geographical description of a location 
utilizing the quarter-section, section, township, and range.
    Lessee means any person holding record title to, or owning 
operating rights in, an oil and/or gas lease issued under the 
regulations in this part and any authorized representative thereof, 
including any designee who reports production or submits royalty 
payments on behalf of the lessee.
    Liquids unloading means the removal of an accumulation of liquid 
hydrocarbons or water from the wellbore of a completed gas well.
    Lost oil or gas means produced oil or gas that escapes containment, 
whether such loss is intentional or unintentional, or that is flared 
before being removed from the lease or unit and cannot be recovered.
    Low-volume FMP means any gas FMP that measures more than 35 Mcf/
day, but less than or equal to 200 Mcf/day, over the averaging period. 
This definition only applies to gas FMPs; it does not apply to oil FMPs 
on a gas-equivalent basis.
    Marketable condition means a condition in which lease products are 
sufficiently free from impurities or otherwise so conditioned that a 
purchaser will accept them under a sales contract typical for the field 
or area.
    Maximum ultimate economic recovery means the recovery of oil and 
gas that a prudent lessee could be expected to make from the field or 
reservoir given existing knowledge and other pertinent facts and 
utilizing common industry practices for primary, secondary, or tertiary 
recovery operations.
    Meter factor means a ratio obtained by dividing the measured volume 
of liquid that passed through a prover or master meter during the 
proving by the measured volume of liquid that passed through the line 
meter during the proving, corrected to base pressure and temperature.
    Mole percent means the number of molecules of a particular type 
that are present in a gas mixture divided by the total number of 
molecules in the gas mixture, expressed as a percentage.
    Monthly Index Zone Price means the index-based value per MMBtu for 
gas production from a lease in an index zone. The Monthly Index Zone 
Price is calculated by averaging the highest reported prices for all 
index-pricing points in the relevant index zone for each ONRR-approved 
publication, summing those averages, dividing by the number of ONRR-
approved publications, and reducing the number calculated by 10 
percent, but not by less than 10 cents per MMBtu or more than 30 cents 
per MMBtu.
    Natural gas liquids (NGLs) means gas plant products consisting of 
ethane, propane, butane, or heavier liquid hydrocarbons.
    Net standard volume means the gross standard volume corrected for 
quantities of non-merchantable substances such as sediment and water.
    NYMEX Calendar Month Average Price means the average of the New 
York Mercantile Exchange (NYMEX) daily settlement prices for light 
sweet crude oil delivered at Cushing, Oklahoma, calculated as follows: 
(1) Sum the prices published for each day during the calendar month of 
production, excluding weekends and Federal holidays, for oil to be 
delivered in the nearest month of delivery for which NYMEX futures 
prices are published corresponding to each such day; and (2) Divide the 
sum by the number of days on which those prices are published, 
excluding weekends and Federal holidays.
    Oil well means a well for which the energy equivalent of the oil 
produced exceeds the energy equivalent of the gas produced at the time 
of completion.
    Operating right (working interest) means a percentage of ownership 
in a lease granting the owner the right to enter upon the leased lands 
to conduct exploratory, drilling, or related operations, including the 
production of oil and gas, in accordance with the terms and conditions 
of the lease.
    Orphan well means an oil, gas, disposal, injection, or service well 
that is no longer in use whether dry, inoperable, or incapable of 
production; that the current lessee did not assume through assignment; 
that has not been drilled, re-entered, operated, or affected by the 
current lessee; and for which there is no legally or financially 
responsible party with sufficient resources to conduct proper plugging, 
abandonment, and surface restoration operations.
    Osage Minerals Council means the independent agency within the 
Osage Nation created by Article XV, section 4, of the Constitution of 
the Osage Nation (2006) with administrative authority to consider and 
approve leases of the Osage Mineral Estate and propose other forms of 
development thereof, and its successors in interest.

[[Page 2458]]

    Osage Mineral Estate means the subsurface mineral estate underlying 
Osage County, Oklahoma that is held in trust by the United States for 
the benefit of the Osage Nation in accordance with the Act of June 28, 
1906, Public Law 59-321, section 3, 34 Stat. 539, as amended.
    Osage Nation means the federally recognized Indian Tribe referred 
to by Article I of the Constitution of the Osage Nation (2006) and its 
predecessors and successors in interest.
    Perennial stream or water source means a stream or water source 
that flows continuously.
    Permittee means any person, other than a lessee, who applies for 
and receives a geophysical exploration permit.
    Person means any individual, corporation, partnership, association, 
firm, consortium, joint venture, or other entity.
    Primary term means the initial term of the lease during which the 
lease contract may be kept in force by either commencement of 
production in paying quantities or the payment of annual rental.
    Production in paying quantities means production of oil or gas from 
a lease that is of sufficient value to exceed direct operating costs 
and the cost of annual rental or minimum royalty.
    Production phase means that event during which oil is delivered 
directly to or through production equipment to the storage facilities 
and includes all operations at the facility other than those defined as 
being within the sales phase.
    Prompt month means the nearest month of delivery for which NYMEX 
futures prices are published during the trading month.
    Quantity transaction record (QTR) means a report generated by a 
flow computer on a LACT, CMS, or other approved system that summarizes 
the daily and/or hourly volume calculated by the flow computer and the 
average or totals of the dynamic data that is used in the calculation 
of gross standard volume.
    Record title means a lessee's interest in a lease which includes 
the obligation to pay rental and the right to assign or surrender the 
lease. Overriding royalty and operating rights are severable from 
record title interests.
    Regional Director means the Regional Director for the Eastern 
Oklahoma Region, Bureau of Indian Affairs, or the Regional Director's 
authorized representative acting under delegated authority.
    Residue gas means hydrocarbon gas consisting principally of methane 
and resulting from processing gas.
    Sales phase means that event during which oil is removed from 
storage facilities at an FMP for sale.
    Seal means a uniquely numbered device that completely secures 
either a valve or those components of a measuring system that affect 
the quality or quantity of the oil being measured.
    Senior fitting means a type of orifice plate holder that allows the 
orifice plate to be removed, inspected, and replaced without isolating 
and depressurizing the meter tube.
    Slop oil means oil that is of such quality that it is not 
acceptable to normal purchasers and is usually sold to oil reclaimers. 
Oil that can be made acceptable to normal purchasers through special 
treatment economically provided at existing or modified facilities or 
using portable equipment at, or upstream of, the FMP, is not slop oil.
    Source record means any unedited, original record, document, or 
data that is used to determine the volume and quality of production, 
regardless of how it was created or stored or the format it is in 
(i.e., paper or electronic). This includes, but is not limited to, raw 
and unprocessed data (e.g., instantaneous and continuous information 
used by flow computers to calculate volumes); gas charts; run tickets; 
calibration, verification, prover and configuration reports; lessee 
field logs; volume statements; event logs; seal records; and gas 
analyses.
    Statistically significant means a difference between two data sets 
that exceeds the threshold of significance. The threshold of 
significance is the maximum difference between two data sets (a and b) 
that can be attributed to uncertainty effects, and is calculated as 
follows:

[GRAPHIC] [TIFF OMITTED] TP13JA23.007

    Where:
    Ts = Threshold of significance, in percent
    Ua = Uncertainty (95 percent confidence) of data set 
a, in percent
    Ub = Uncertainty (95 percent confidence) of data set 
b, in percent

    Superintendent means the Superintendent of the Osage Agency, Bureau 
of Indian Affairs, the Superintendent's authorized representative 
acting under delegated authority, or such other person or official that 
may be delegated to fulfill responsibilities and exercise authorities 
under this part.
    Surface owner means any person who owns a surface estate within 
Osage County, Oklahoma, regardless of whether the surface estate is 
held in fee, restricted fee, or trust status.
    Total observed volume (TOV) means the total measured volume of all 
oil, sludge, S&W, and free water at the measured or observed 
temperature and pressure.
    Trading month means the period extending from the second business 
day before the 25th day of the second calendar month preceding the 
delivery month (or, if the 25th day of that month is a non-business 
day, the second business day before the last business day preceding the 
25th day of that month) through the third business day before the 25th 
day of the calendar month preceding the delivery month (or if the 25th 
day of that month is a non-business day, the third business day before 
the last business day preceding the 25th day of that month), unless the 
NYMEX publishes a different definition or different dates on its 
official website, http://www.cmegroup.com, in which case the NYMEX 
definition will apply.
    Upper calibrated limit means the maximum engineering value for 
which a transducer was calibrated by certified equipment, either in the 
factory or in the field.
    US well number means a unique, permanent numeric identifier 
assigned to each oil and gas well drilled in the United States that 
includes the completion code.
    Very-high-volume FMP means any gas FMP that measures more than 
1,000 Mcf/day over the averaging period. This definition only applies 
to gas FMPs; it does not apply to oil FMPs on an equivalent-gas basis.
    Very-low-volume FMP means any gas FMP that measures 35 Mcf/day or 
less over the averaging period. This definition only applies to gas 
FMPs; it does not apply to oil FMPs on an equivalent-gas basis.
    Waste of oil or gas means any action or inaction by the lessee that 
is not sanctioned by the Superintendent as necessary for proper 
development and production, where compliance costs are not greater than 
the monetary value of the resources they are expected to conserve, and 
that results in:
    (1) A reduction in the quality or quantity of oil or gas ultimately 
producible from a reservoir under prudent and proper operations; or
    (2) Avoidable surface loss of oil or gas.
    Waste oil means oil that the Superintendent determined is of such 
quality that it cannot be treated economically and put in a marketable 
condition with existing or modified lease facilities or portable 
equipment, cannot be sold to reclaimers, and has no economic value.

[[Page 2459]]

    (b) As used in this part, the following acronyms apply:
    API means American Petroleum Institute.
    BIA means Bureau of Indian Affairs.
    Btu means British thermal unit.
    CPL means correction for the effect of pressure on a liquid.
    CTL means correction for the effect of temperature on a liquid.
    FCCP means a Failure to Correct Civil Penalty Notice.
    ft msl means feet above mean sea level.
    GPA means Gas Processors Association.
    GPS means Global Positioning System.
    IBIA means the Interior Board of Indian Appeals, Office of Hearings 
and Appeals.
    IBLA means the Interior Board of Land Appeals, Office of Hearings 
and Appeals.
    ILCP means an Immediate Liability Civil Penalty Notice.
    IRS means Internal Revenue Service.
    Mcf means 1,000 standard cubic feet.
    MMBtu means million metric British thermal units.
    MMcf means million cubic feet.
    NIST means National Institute of Standards and Technology.
    NONC means a Notice of Noncompliance.
    NTL means Notice to Lessee(s).
    ONRR means Office of Natural Resources Revenue.
    psia means pounds per square inch--absolute.
    psig means pounds per square inch--gauge.
    S&W means sediment and water.
    SWD means saltwater disposal.


Sec.  226.2  Authorities that govern oil and gas activities within the 
Osage Mineral Estate.

    All oil and gas exploration and development activities conducted 
within the Osage Mineral Estate are subject to:
    (a) The regulations in this part;
    (b) Lease and permit terms and conditions;
    (c) Orders, notices, and instructions the Superintendent issues;
    (d) Orders, notices, and instructions ONRR issues; and
    (e) All other applicable laws, regulations, and authorities.


Sec.  226.3  Authority and responsibility of the Superintendent of the 
Osage Agency.

    The Superintendent of the Osage Agency has the authority and 
responsibility to administer leasing and development of the Osage 
Mineral Estate.


Sec.  226.4  Authority and responsibility of the Office of Natural 
Resources Revenue (ONRR).

    The Office of Natural Resources Revenue (ONRR) has the authority 
and responsibility for administering the Osage Agency's royalty 
management program including, but not limited to, royalty and 
production accounting, reporting, verification, collection, 
enforcement, and appeals.


Sec.  226.5  Orders and notices.

    (a) The Superintendent is authorized to issue orders and notices 
when necessary to implement, supplement, clarify, and enforce the 
regulations in this part. Orders and notices the Superintendent issues 
under this section are binding on the lessee and any other persons they 
apply to. The Superintendent may, in their discretion, grant an 
extension of the time to comply with an order or notice.
    (b) ONRR is authorized to issue orders and notices when necessary 
to implement, supplement, clarify, and enforce the regulations in this 
part. Orders that ONRR issues under this section are binding on the 
lessee and any other persons they apply to.


Sec.  226.6  Service of official correspondence.

    (a) The Superintendent and ONRR will serve all official 
correspondence by regular U.S. mail, certified mail--return receipt 
requested, private delivery service (i.e., UPS or FedEx), or hand 
delivery.
    (b) The Superintendent will serve official correspondence to the 
party identified on the most recently received Lease Contact of Record 
form. The lessee is responsible for notifying the Superintendent of any 
change in the designated point of contact's name, address, or phone 
number by submitting an updated form within two weeks of any such 
change.
    (c) ONRR will serve official correspondence to the party identified 
on the most recently received Form ONRR-4444, Address/Addressee of 
Record, for the type of correspondence at issue. The reporter is 
responsible for notifying ONRR of any name or address changes within 
two weeks of any such change.
    (d) If the lessee, reporting party, or payor fails to submit or 
update contact information in accordance with the requirements in this 
section:
    (1) The Superintendent may use the name and address listed on the 
lease; and
    (2) ONRR may use the individual or departmental name, address, or 
position title, contained in ONRR's database based on previous formal 
or informal communications or correspondence.
    (e) The Superintendent and ONRR may also obtain contact information 
from public records and send official correspondence to:
    (1) The registered agent;
    (2) A corporate officer; or
    (3) The addressee of record reflected in the files of any state 
Secretary, any Federal or state agency that keeps official records of 
business entities or corporations, or other appropriate public records 
for individuals, business entities, and corporations.
    (f) The Superintendent and ONRR consider the date of service for 
official correspondence to be:
    (1) Seven calendar days for regular U.S. mail;
    (2) The date of receipt for certified mail--return receipt 
requested and private delivery service; and
    (3) The date of delivery for hand delivery.
    (g) If, the Superintendent or ONRR serves official correspondence 
using multiple methods and the dates of receipt differ, the date of the 
earliest receipt is the date of service.
    (h) If, after a reasonable effort, the Superintendent or ONRR are 
unable to deliver official correspondence to the contact of record, the 
correspondence will be considered constructively served seven calendar 
days after the original mailing date. This includes, but is not limited 
to, situations where delivery does not occur because:
    (1) The contact of record moved without filing a forwarding 
address, Lease Contact of Record form, or ONRR Form-4444;
    (2) The forwarding order expired;
    (3) Delivery was expressly refused; or
    (4) The correspondence was unclaimed and the U.S. Postal Service, a 
private mailing service, or an individual who attempted to make 
delivery using a different method of service substantiates the delivery 
attempt.


Sec.  226.7  Forms.

    Leases, assignments, applications, bonds, affidavits, reports, and 
other instruments must be on forms approved by the Superintendent or 
ONRR. Only the official version and current edition of such forms will 
be accepted.


Sec.  226.8  Acceptable forms of payment.

    All sums due under a lease or the regulations in this part must be 
paid by electronic funds transfer (EFT), certified check, cashier's 
check, money order, or commercial or personal check drawn on a solvent 
bank, otherwise specified herein or notified by the Superintendent or 
ONRR in writing. Such sums constitute a prior lien on all equipment

[[Page 2460]]

and unsold oil located on the lease or unit.


Sec.  226.9  Environmental reviews and cultural surveys.

    Prior to approving leases and permit applications for operations 
requiring new or additional ground-disturbance, the Superintendent 
must:
    (a) Ensure that environmental review has been conducted in 
accordance with the National Environmental Policy Act of 1969 (NEPA), 
42 U.S.C. 4321, et seq., the regulations promulgated by the Council on 
Environmental Quality (CEQ), 40 CFR parts 1500 through 1508, and the 
Department's regulations implementing NEPA, 43 CFR part 46, and that an 
environmental record of review (e.g., categorical exclusion checklist, 
determination of NEPA adequacy), environmental assessment, or 
environmental impact statement has been prepared, as appropriate.
    (b) Ensure that all necessary archeological or cultural surveys are 
performed, and clearances obtained, in accordance with the National 
Historic Preservation Act (NHPA), 54 U.S.C. 300101, et seq., the 
regulations promulgated by the Advisory Council on Historic 
Preservation, 36 CFR part 800 et seq., and the Archaeological Resources 
Protection Act of 1979 (ARPA), 16 U.S.C. 470aa-470mm, as applicable.


Sec.  226.10  Information collection.

    The collections of information in this part have been approved by 
the Office of Management and Budget under 44 U.S.C. 3501 et seq. and 
assigned OMB Control Number 1076-0180 (BIA collections) and OMB Control 
Numbers 1012-0004 and 1012-0006 (ONRR collections). Response is 
required to obtain a benefit. A Federal agency may not conduct or 
sponsor, and you are not required to respond to, a collection of 
information unless it displays a valid OMB Control Number.


Sec.  226.11  Public availability of information.

    The BIA and ONRR will make all records and information submitted in 
accordance with the regulations in this part available to the public 
for inspection, without notification of the submitter, subject to the 
following exceptions:
    (a) Trade secrets;
    (b) Privileged or confidential commercial or financial information; 
and
    (c) Information protected from disclosure by the Privacy Act (5 
U.S.C. 552a).

Subpart B--Acquiring a Lease

Authorized Procedures


Sec.  226.12  Procedures the Osage Minerals Council may use to enter 
into a lease.

    The Osage Minerals Council may utilize the following procedures to 
enter into a lease of the Osage Mineral Estate:
    (a) Competitive bidding at an advertised lease sale; or
    (b) Negotiation with prospective lessees. The Osage Minerals 
Council may negotiate directly or request that the Superintendent 
undertake negotiation on its behalf. Requests that the Superintendent 
negotiate leases must be submitted in writing together with a 
resolution authorizing such negotiation.

Competitive Leases


Sec.  226.13  Advertisement of a lease sale.

    (a) The Osage Minerals Council may request that the Superintendent 
advertise a competitive lease sale. Such requests must be submitted to 
the Superintendent in writing at least 60 calendar days in advance of 
the date the Osage Minerals Council would like the Notice of Lease Sale 
published, together with a resolution authorizing the lease sale. The 
resolution must identify the:
    (1) Location, date, and time of the lease sale; and
    (2) Minimum acceptable bid.
    (b) Upon receipt of the Osage Minerals Council's written request 
under paragraph (a) of this section, the Superintendent will publish a 
Lease Sale Bulletin advertising the lease sale and calling for 
nominations.


Sec.  226.14  Nominating lands for a lease sale.

    (a) You must submit a nomination letter to the Superintendent to 
nominate lands for a lease sale. The nomination letter must:
    (1) Include the name and address of the person making the 
nomination;
    (2) Identify the legal description of the lands nominated; and
    (3) Be legible and signed in ink.
    (b) Nomination letters must be submitted to the Superintendent by 
mail or hand delivery prior to expiration of the nomination period 
identified in the Lease Sale Bulletin. Nomination letters that do not 
meet the requirements in paragraph (a) of this section will be 
rejected.


Sec.  226.15  Publication of a Notice of Lease Sale.

    The Superintendent will publish a Notice of Lease Sale at least 30 
calendar days prior to the date of the sale. The Notice of Lease Sale 
will offer leases for sale to the highest responsible bidder and 
identify the nominated lands; primary term of each lease offered; 
location, date, and time of the sale; and method for submitting bids.


Sec.  226.16  Bidding system.

    (a) Leases will be offered for sale by competitive bonus bidding 
under the terms and conditions specified in the Notice of Lease Sale 
and in accordance with applicable laws and regulations.
    (b) All bids are subject to the Osage Minerals Council's acceptance 
and the Superintendent's approval. The Superintendent reserves the 
right to reject any bid and may require any bidder to submit evidence 
of good faith and ability to comply with the requirements in the Notice 
of Lease Sale.
    (c) A winning bid is the highest bid by a qualified bidder that is 
equal to, or exceeds, the minimum acceptable bid.
    (d) Each successful bidder must deposit 25 percent of the bonus bid 
with the Superintendent by 4:30 p.m. central standard time on the day 
of the lease sale. Deposits must be paid by EFT, cashier's check, or 
money order.


Sec.  226.17  Award of leases.

    (a) A successful bidder must deposit the following with the 
Superintendent within 20 calendar days of the lease sale:
    (1) The balance of the bonus;
    (2) An executed Oil and Gas Mining Lease form;
    (3) An Evidence of Authority to Execute Papers form; and
    (4) A certificate of good standing issued by the Oklahoma Secretary 
of State.
    (b) The Superintendent may extend the time for submitting the 
executed lease, evidence of authority to execute papers, and 
certificate of good standing. No extension of time may be granted for 
depositing the balance of the bonus.
    (c) The bonus, or any portion thereof, deposited with the 
Superintendent will be forfeited for the use and benefit of the Osage 
Nation if:
    (1) A successful bidder fails to pay the bonus in full by the 
required deadline;
    (2) A successful bidder fails to file the items in paragraphs 
(a)(2) through (4) of this section by the required deadline; or
    (3) The Superintendent denies approval of the lease pursuant to 
paragraph (d) of this section, through no fault of the Osage Minerals 
Council or BIA.
    (d) Competitive leases are subject to the Superintendent's 
approval. The Superintendent may deny the approval of a lease executed 
by a successful bidder upon satisfactory evidence of collusion, fraud, 
or other irregularity.

[[Page 2461]]

Non-Competitive Leases


Sec.  226.18  Submitting an offer to lease.

    (a) You may submit non-competitive offers to lease the Osage 
Mineral Estate to the Osage Minerals Council. Such offers must include 
the:
    (1) Name and address of the offeror;
    (2) Legal description of the lands covered by the proposed lease;
    (3) Bonus amount; and
    (4) Such other information as may be required by the Osage Minerals 
Council.
    (b) Upon receipt of a non-competitive offer to lease, the Osage 
Minerals Council may accept the offer, reject the offer, or enter 
negotiations with the offeror directly or through the Superintendent.


Sec.  226.19  Acceptance of an offer to lease.

    (a) A successful offeror must deposit the following with the 
Superintendent within 20 calendar days of the Osage Minerals Council's 
acceptance of a non-competitive offer to lease:
    (1) The full bonus;
    (2) An executed Oil and Gas Mining Lease form;
    (3) An Evidence of Authority to Execute Papers form; and
    (4) A certificate of good standing issued by the Oklahoma Secretary 
of State.
    (b) Non-competitive leases are subject to the Superintendent's 
approval.

Lease Terms


Sec.  226.20  Types of leases.

    All leases of the Osage Mineral Estate issued after [effective date 
of final rule] will be combination oil and gas leases. Oil-only and 
gas-only leases issued prior to [effective date of final rule] will 
remain in full force and effect until such time as they terminate or 
are cancelled but cannot be assigned unless the assignee executes a new 
combination oil and gas lease covering the subject lands.


Sec.  226.21  Primary term of leases.

    (a) Leases will be for a primary term established by the Osage 
Minerals Council, subject to the Superintendent's approval, and will 
continue so long thereafter as oil and/or gas is produced in paying 
quantities.
    (b) The Superintendent may approve an amendment extending the 
primary term of a lease for up to two years if actual drilling 
operations commenced prior to expiration of the primary term, 
operations are being diligently pursued at the end of the primary term, 
and the parties jointly submit a Lease Amendment form evidencing their 
agreement. This includes any lease that is part of an approved 
cooperative agreement where actual drilling operations took place 
within the unit or area covered by the agreement. The following 
requirements must be met to qualify for an extension of the primary 
term:
    (1) Actual drilling operations must have been conducted in a manner 
consistent with serious oil and gas exploration in that area based on 
existing knowledge of the geology or other pertinent facts and 
information.
    (2) In drilling a new well on a lease, or for the benefit of a 
lease pursuant to the terms of an approved cooperative agreement, the 
lessee must take the well to a depth sufficient to penetrate at least 
one formation recognized as having potential to produce oil or gas.
    (3) In the reentry of an existing well, the lessee must take the 
well to a depth sufficient to penetrate at least one new and deeper 
formation recognized as having the potential to produce oil or gas.


Sec.  226.22  Effect of changes in current regulations on existing 
leases.

    Leases issued pursuant to this part are subject to the current 
regulations, all of which are made a part of such leases. No amendment 
or change in the regulations after the approval of any lease will 
operate to affect the primary term, acreage, royalty rate, or rental 
set forth therein unless the parties jointly submit a Lease Amendment 
form evidencing their agreement to the amended terms and the 
Superintendent approves the amendment.


Sec.  226.23  U.S. Government employees may not acquire leases.

    U.S. Government employees are prohibited from acquiring leases of 
the Osage Mineral Estate or any interests therein.

Subpart C--Cooperative Agreements and Unitization


Sec.  226.24  Cooperative agreements.

    (a) The Osage Minerals Council and lessees may unitize or merge two 
or more leases into a cooperative agreement to promote the development 
of any pool, field, or similar area, or any part thereof, subject to 
the Superintendent's approval.
    (b) The Osage Minerals Council and lessees must submit requests for 
approval of cooperative agreements to the Superintendent at least 90 
calendar days prior to the earliest expiration date of any of the 
leases proposed to be covered by the agreement.
    (c) Any agreement by the parties in interest to supplement, modify, 
amend, or terminate a cooperative agreement as to all the lands 
covered, or any portion thereof, is subject to the Superintendent's 
approval. Upon approval of termination, the leases covered by the 
cooperative agreement will be restored to their original terms.


Sec.  226.25  Unit development plans.

    The Superintendent may, with the consent of the Osage Minerals 
Council, require all leases issued under this part to join a unit 
development plan for the purpose of preventing waste and promoting 
development of the Osage Mineral Estate. Any such plan must adequately 
protect the rights of all parties in interest.

Subpart D--Transferring a Lease by Assignment


Sec.  226.26  Assignment of record title interest in a lease.

    (a) A lease, or any divided or undivided interest in a lease, may 
be transferred by assignment subject to the Superintendent's approval. 
If an assignment will only cover a portion of a lease, the transfer 
requires both the Osage Minerals Council's consent and the 
Superintendent's approval. The assignment of a separate zone or 
deposit, or part of a legal subdivision, is prohibited.
    (b) If a lease is divided by the assignment of an entire interest 
in any part, the assigned and retained portions of the lease are 
segregated and become separate and distinct leases.
    (c) The assignor must submit the Assignment of Record Title 
Interest form to the Superintendent for approval within 30 calendar 
days of the date the last party executes the instrument.


Sec.  226.27  Qualifications of the assignee.

    The assignee must be qualified to hold the lease, or interest 
therein, under the regulations in this part and must furnish a 
satisfactory bond.


Sec.  226.28  Effective date of transfer.

    The effective date of the transfer is 12:01 a.m. central standard 
time on the first calendar day following the day the Superintendent 
approves the assignment.


Sec.  226.29  Effect of assignment on the assignor's liability under 
the lease.

    (a) The assignor remains liable for the performance of all lease 
obligations, monetary and non-monetary, that accrue in connection with 
the lease prior to the effective date of the assignment specified in 
Sec.  226.28.
    (b) After the assignment is approved, the Superintendent and ONRR 
may require the assignor to bring the lease into compliance if the 
assignee fails to satisfy an obligation that accrued prior to the 
effective date of the assignment.

[[Page 2462]]

This does not include the obligation to plug and abandon wells the 
assignee assumed liability for pursuant to the assignment.


Sec.  226.30  Effect of assignment on the assignee's liability under 
the lease.

    (a) The assignee must comply with the terms and conditions of the 
lease, any approved permits for wells located thereon, and the 
regulations in this part as they apply to the rights and obligations 
acquired.
    (b) The assignee is liable for all obligations that accrue after 
the effective date of the assignment specified in Sec.  226.28 
including, but not limited to, properly plugging and abandoning all 
wells that the assignee drills, operates, or controls following the 
effective date of the transfer and remediating environmental problems 
or other lease violations, regardless of whether such problems were 
identified at the time of the assignment. For purposes of this section, 
an assignee is considered to ``control'' all unplugged wells located on 
the lease that are recorded in the Osage Agency's plat book or that a 
purchaser exercising reasonable diligence could or should have known of 
at the time of the assignment, except for orphan wells that neither the 
assignor nor assignee occasioned.


Sec.  226.31  Overriding royalty agreements.

    (a) Agreements creating overriding royalties or payments out of 
production are not considered an interest in a lease as that term is 
used in Sec.  226.26.
    (b) Agreements creating overriding royalties or payments out of 
production are hereby authorized and do not require the 
Superintendent's approval, subject to the condition that nothing in any 
such agreement will be construed as modifying the lessee's obligations 
under the terms and conditions of the lease or the regulations in this 
part. All such obligations remain in full force and effect, the same as 
if free of any overriding royalties or payments out of production.
    (c) The Superintendent will not consider the existence of 
agreements creating overriding royalties or payments out of production 
as justification for approving the abandonment of any well, regardless 
of whether they are actually paid.
    (d) The Superintendent will suspend an agreement creating 
overriding royalties or payments out of production if it is determined 
that the working interest income of an active producing well is less 
than or equal to the operational cost of the well.


Sec.  226.32  Drilling contracts.

    The lessee is authorized to enter into drilling contracts with a 
stipulation that nothing in such contracts may bind the Department or 
otherwise require the Superintendent's approval of subsequent 
assignments that may be contemplated by the contract.

Subpart E--Ending a Lease


Sec.  226.33  Surrender of all or any portion of a lease.

    (a) A lessee may surrender all or any portion of a lease at any 
time by submitting a written request for surrender to the 
Superintendent. All parties holding record title interests in the lease 
must sign the request for surrender.
    (b) The Superintendent may approve the surrender, or partial 
surrender, of a lease subject to the following conditions:
    (1) All royalties, including minimum and compensatory royalties, 
rental, interest, late charges, assessments, civil penalties, and other 
amounts that may be due under the regulations in this part have been 
paid in full; and
    (2) All wells located on the leased lands being surrendered that 
are no longer capable of producing in paying quantities have been 
properly plugged and abandoned and the well sites restored.
    (c) The Superintendent must obtain the Osage Minerals Council's 
consent to approve the partial surrender of a lease if the acreage to 
be retained is less than 160 acres.
    (d) The lessee and surety are not relieved of any obligations or 
liabilities under the lease or the regulations in this part until the 
Superintendent approves the request for surrender.
    (e) If a lease has been recorded, the lessee must execute a release 
and record it in the proper office upon the Superintendent's approval 
of the request for surrender.
    (f) Surrender or partial surrender of a lease does not entitle the 
lessee to a refund of advance rental or other sums paid under the lease 
or the regulations in this part.


Sec.  226.34  Termination of a lease by operation of law.

    (a) If a lessee fails to timely pay advance annual rental in 
accordance with Sec.  226.35, the lease terminates by operation of law 
as of the date rental was due.
    (b) If a lessee fails to drill a well capable of producing oil or 
gas in paying quantities during the primary term in accordance with 
Sec.  226.21, the lease terminates by operation of law as of the date 
the primary term expires.
    (c) Any lease in the extended term upon which there are no wells 
capable of producing oil or gas in paying quantities terminates by 
operation of law as of the date production ceases unless the 
Superintendent approved a request to temporarily abandon the wells on 
the lease under Sec.  226.72.
    (d) When a lease terminates, permanent improvements remain part of 
the land and become the property of the surface owner unless the lessee 
and surface owner agree otherwise. The lessee must file a copy of any 
such agreement with the Superintendent within 15 calendar days of its 
execution.
    (e) The lessee must remove all trash, debris, and personal property 
from the lease within 90 calendar days of termination. For purposes of 
this section, personal property includes, but is not limited to, tools, 
tanks, pumping and drilling equipment, derricks, engines, machinery, 
tubing, and casings. Upon expiration of the 90-day removal period, the 
ownership of all casings reverts to the Osage Nation and the ownership 
of all other personal property transfers to the surface owner.
    (f) Nothing in this section relieves the lessee of the 
responsibility for removing permanent improvements and personal 
property from the leased lands if the Superintendent orders such 
removal.

Subpart F--Rental and Royalty

Rental Obligations


Sec.  226.35  Annual rental requirements.

    (a) The annual rental for leases approved after [effective date of 
final rule] is $8 per acre or fraction thereof.
    (b) The lessee must pay advance annual rental for each year of the 
primary term within 15 calendar days of the Superintendent's approval 
of the lease. If the lease is amended to extend the primary term, the 
lessee must pay advance annual rental for each additional year of the 
primary term within 15 calendar days of the Superintendent's approval 
of the extension.
    (c) Rental must be paid for a full year and may not be prorated, 
refunded, or credited against production royalty.
    (d) Rental payments must be mailed to the Superintendent addressed 
to: Osage Agency--BIA, Dept. C155, P.O. Box 105533, Atlanta, GA 30348-
5533.

Royalty Obligations


Sec.  226.36  Royalty rate for oil.

    The lessee must pay to the Superintendent as royalty no less than 
16\2/3\ percent of the value of all oil produced and removed or sold 
from the lease. The Osage Minerals Council may,

[[Page 2463]]

upon presentation of justifiable economic evidence by a lessee, agree 
to a lower royalty rate, of no less than 12\1/2\ percent of the value 
of all oil produced and removed or sold from the lease, subject to the 
Superintendent's approval. The Superintendent may only approve a lower 
royalty rate if it is determined to be in the best interest of the 
Osage Nation.


Sec.  226.37  Calculating the value of oil for royalty purposes.

    (a) Unless the Osage Minerals Council elects to take royalty in 
kind under Sec.  226.42, the value of oil for royalty purposes is the 
greater of the:
    (1) NYMEX Calendar Month Average Price of oil at Cushing, Oklahoma, 
for the month in which the produced oil was removed or sold from the 
lease, adjusted for gravity using the scale set forth in Sec.  226.38; 
or
    (2) Actual selling price for the transaction, adjusted for gravity 
using the scale set forth in Sec.  226.38.
    (b) The applicable NYMEX Calendar Month Average Price will be 
published on ONRR's website at https://www.onrr.gov.


Sec.  226.38  Gravity adjustment for oil.

    (a) The gravity adjustment of the NYMEX Calendar Month Average 
Price of oil at Cushing, Oklahoma under Sec.  226.37(a) is a deduction 
from the price per barrel, as follows:

------------------------------------------------------------------------
If the gravity of the oil is . .
                .                  the rate is . . .    for each . . .
------------------------------------------------------------------------
(1) At or between 40.0 and 44.9   zero                ..................
 degrees.
(2) At or between 35.0 and 39.9   $0.02.............  degree or fraction
 degrees.                                              thereof below
                                                       40.0.
(3) Below 35.0 degrees..........  $0.10 plus an       one-tenth of one
                                   additional $0.015.  degree below
                                                       35.0.
(4) Above 44.9 degrees..........  $0.015............  for each one-tenth
                                                       of one degree
                                                       above 44.9.
------------------------------------------------------------------------

    (b) The Superintendent may, on or before the fifth calendar day of 
the month following production, publish a gravity adjustment scale for 
oil of gravity below 40.0 degrees or above 44.9 degrees that supersedes 
this section if they determine that such adjustments are warranted 
based on market conditions.


Sec.  226.39  Royalty rate for gas.

    The lessee must pay to the Superintendent as royalty no less than 
16\2/3\ percent of the value of all gas, including residue gas and gas 
plant products, produced and removed or sold from the lease. The Osage 
Minerals Council may, upon presentation of justifiable economic 
evidence by a lessee, agree to a lower royalty rate, of no less than 
12\1/2\ percent of the value of all gas, including residue gas and gas 
plant products, produced and removed or sold from the lease, subject to 
the Superintendent's approval. The Superintendent will only approve a 
lower royalty rate if it is determined to be in the best interest of 
the Osage Nation.


Sec.  226.40  Calculating the value of gas for royalty purposes.

    Unless the Osage Minerals Council elects to take royalty-in-kind 
under Sec.  226.42, the value of production for royalty purposes is 
calculated by multiplying the measured volume of gas at the well (Mcf), 
times the heating value of the gas (MMBtu/Mcf), times the Monthly Index 
Zone Price of the gas ($/MMBtu) for Oklahoma Zone 1 published by ONRR 
on its website, https://www.onrr.gov. The heating value of the gas must 
be calculated and reported in accordance with Sec. Sec.  226.140(a) and 
(b) and 226.141, respectively. If the Monthly Index Zone Price ceases 
to be published or is otherwise unavailable, the Superintendent must 
establish a comparable method for calculating the value of production. 
No deductions or allowances, whether monetary, volumetric, or 
otherwise, are allowed.


Sec.  226.41  Minimum royalty.

    (a) If the royalty paid for a producing lease during any year is 
less than the amount of the annual rental for the lease, the lessee 
must pay minimum royalty.
    (b) Minimum royalty in an amount equal to the annual rental 
specified for the lease less the amount of the royalty paid on 
production is due on or before the lease anniversary date.
    (c) Failure to timely pay minimum royalty will result in the 
assessment of interest on all unpaid or underpaid minimum royalty 
amounts. Interest will be charged at the IRS underpayment rate pursuant 
to 26 U.S.C. 6621(a)(2), or such other rate as the Superintendent or 
ONRR may prescribe. The IRS underpayment rate is posted quarterly and 
is available online at https://www.irs.gov. Interest will be charged 
only for the number of days the payment is late.
    (d) Minimum royalty payments must be paid to ONRR in accordance 
with the requirements set forth in Sec.  226.43.


Sec.  226.42  Royalty-in-kind.

    (a) The Osage Minerals Council may take oil and gas royalty-in-kind 
on a lease-by-lease basis or for all leases in Osage County.
    (b) The Osage Minerals Council must provide the Superintendent and 
affected lessees with at least 30 calendar days' written notice of its 
decision to take royalty-in-kind and at least 60 calendar days' written 
notice of its decision to terminate royalty-in-kind. The Osage Minerals 
Council must submit resolutions to the Superintendent for its decisions 
to take and terminate royalty-in-kind.
    (c) The Osage Minerals Council must take 100 percent of the daily 
royalty oil and royalty gas produced from all leases placed in royalty-
in-kind status. Royalty oil and royalty gas must be taken in-kind at 
the wellhead. For purposes of this section, royalty oil and royalty gas 
mean the daily lease production multiplied by the royalty rate.
    (d) Lessees must furnish free storage for royalty oil and royalty 
gas for 30 calendar days from the date of production. The Osage 
Minerals Council must negotiate agreements for the storage of royalty 
oil and royalty gas directly with lessees. The Superintendent will not 
negotiate, review, or approve royalty-in-kind storage agreements.
    (e) All rights, duties, and obligations that exist under the terms 
and conditions of the lease and the regulations in this part remain in 
effect when royalty is taken in kind, including the lessee's obligation 
to pay advance annual rental and minimum royalty.


Sec.  226.43  Royalty payments.

    (a) Royalty payments must be remitted to ONRR. The lessee or 
purchaser may remit royalty payments in accordance with Sec.  226.44.
    (b) Royalty payments are due on or before the last calendar day of 
the month following the month during which the oil or gas is produced 
and removed or sold and shall cover all volumes removed or sold for the 
preceding month. If the last calendar day of the month falls on a 
weekend or

[[Page 2464]]

Federal holiday, payments are due on the first business day of the next 
month.
    (c) All royalty payments must be remitted using one of the forms of 
payment identified in Sec.  226.8 unless ONRR specifies otherwise. 
Payment by EFT is preferred.
    (d) Non-EFT royalty payments must be made payable to ``DOI-ONRR for 
BIA Osage Nation.'' Payments mailed via U.S. Postal Service must be 
addressed to: Office of Natural Resources Revenue, P.O. Box 25627, 
Denver, CO 80225-0627. Payments sent via courier or overnight delivery 
service must be addressed to: Office of Natural Resources Revenue, 
Denver Federal Center, Building 85, Entrance N-1, Room 332, 6th Avenue 
and Kipling Street, Denver, CO 80225.
    (e) ONRR must receive royalty payments submitted by EFT in its 
account on or before the due date. ONRR must receive royalty payments 
submitted via U.S. Postal Service, courier, or overnight delivery 
service at the applicable address set forth in paragraph (d) of this 
section before 4 p.m. mountain time on the due date.
    (f) Failure to timely and properly make royalty payments will 
result in the assessment of interest on all unpaid or underpaid royalty 
amounts. Interest will be charged at the IRS underpayment rate pursuant 
to 26 U.S.C. 6621(a)(2), or such other rate as the Superintendent or 
ONRR may prescribe. The IRS underpayment rate is posted quarterly and 
is available online at https://www.irs.gov. Interest will be charged 
only for the number of days the payment is late.
    (g) A payor may recoup an overpayment through a recoupment on Form 
ONRR-2014 against the current month's royalties or other revenues owed 
on the same lease. For any month, a payor may not recoup more than 100 
percent of the royalties or other revenues owed in that month. 
Overpayments subject to recoupment include all payments made in excess 
of the required payment for royalty, rental, bonus, or other amounts 
owed as specified by the terms and conditions of the lease, the 
regulations in this part, orders and notices the Superintendent or ONRR 
issue, and other applicable law. ONRR may order any payor not to recoup 
any amount for such reasonable period as may be necessary for ONRR to 
review the claimed overpayment.


Sec.  226.44  Royalty payment contracts and division orders.

    (a) The lessee may enter into contracts or division orders with 
purchasers of oil and gas, or derivatives therefrom, that designate the 
purchaser as the party responsible for remitting royalty payments. The 
lessee must provide the Superintendent with a copy of the contract or 
division order evidencing such designation.
    (b) A contract or division order does not relieve the lessee from 
responsibility for the payment of royalty or from responsibility for 
ensuring the accurate measurement and reporting of all oil and gas 
removed or sold from the lease. If the purchaser fails to pay or 
underpays royalty, the lessee is responsible for payment in full of all 
amounts due and owing, including any interest that may be assessed.


Sec.  226.45  Royalty reports.

    (a) The lessee must submit a certified monthly royalty report to 
ONRR using Form ONRR-2014, Report of Sales and Royalty Remittance.
    (b) ONRR must receive reports by 4 p.m. mountain time on or before 
the last calendar day of the month that follows the month during which 
the oil and gas is produced and removed or sold. If the last calendar 
day of the month falls on a weekend or Federal holiday, the report is 
due on the first business day of the next month.
    (c) The lessee must submit Form ONRR-2014 electronically via ONRR's 
eCommerce Reporting website, https://onrrreporting.onrr.gov, unless 
they qualify for an exception under paragraph (d) of this section. The 
lessee must enter royalty data into the system manually or upload data 
files using the American Standard Code for Information Interchange 
(ASCII) or Comma Separated Values (CSV) file layout formats specified 
by ONRR. Detailed information regarding how to complete and submit Form 
ONRR-2014 is available at https://www.onrr.gov/ReportPay/royalty-reporting.htm.
    (d) The lessee may submit Form ONRR-2014 manually if they:
    (1) Have never reported to ONRR before, in which case they have 
three months from the date the first royalty report is due to begin 
reporting electronically;
    (2) Are only reporting minimum royalty; or
    (3) Are a small business, as defined by the Small Business 
Administration, and do not own a computer.
    (e) Royalty reports submitted manually via U.S. Postal Service must 
be addressed to: Office of Natural Resources Revenue, P.O. Box 25627, 
Denver, CO, 80225-0627. Royalty reports submitted manually via courier 
or overnight delivery service must be addressed to: Office of Natural 
Resources Revenue, Denver Federal Center, Building 85, Entrance N-1, 
Room 332, 6th Avenue and Kipling Street, Denver, CO 80225. If a lessee 
who is submitting royalty reports manually has three or more late 
submissions, ONRR may issue an order requiring the lessee to submit all 
future royalty reports electronically.


Sec.  226.46  Requirements for royalty, rental, and payment records.

    (a) The lessee must make, retain, and preserve accurate and 
complete records demonstrating that rental, royalty, and other payments 
relating to oil and gas leases comply with the terms and conditions of 
the lease, the regulations in this part, and applicable orders or 
notices. Such records include, but are not limited to, royalty and 
production reports; computer programs, automated files, and supporting 
systems documentation used to produce reports submitted to the 
Superintendent and ONRR; and relevant statements, receipts, run 
tickets, QTRs, contracts and agreements.
    (b) The lessee must maintain and preserve records under this 
section for a minimum of six years from the date upon which the 
relevant transaction was recorded unless the Superintendent or ONRR 
provides written notice to the lessee that an audit or investigation is 
being conducted and the records must be maintained for a longer period. 
If an audit or investigation of the records is being conducted, the 
lessee must maintain the records until the Superintendent or ONRR 
issues a written release of such obligation.
    (c) The lessee must make records available to the Superintendent 
and ONRR for inspection upon request. The lessee will be given a 
reasonable period of time to produce historical records.


Sec.  226.47  Right of the U.S. Government to purchase oil.

    Any of the executive departments of the U.S. Government have the 
option to purchase all or any part of the oil produced from any lease 
under this part at no less than the price set forth in Sec.  226.37.

Audits


Sec.  226.48  Audits and reviews.

    ONRR may initiate and conduct audits and reviews relating to the 
scope, nature, and extent of lessees' and purchasers' compliance with 
rental, royalty, and other payment and reporting requirements under the 
terms and conditions of the lease, the regulations in this part, and 
applicable orders or notices.

[[Page 2465]]

Subpart G--Bonds

Lease Bonds


Sec.  226.49  Grandfathering of existing bonds.

    (a) Existing $5,000 lease bonds filed with leases and assignments 
approved prior to [effective date of final rule] are exempt from 
Sec. Sec.  226.51(b) and 226.53(a)(3).
    (b) Existing $50,000 collective bonds filed with leases and 
assignments approved prior to [effective date of final rule] are exempt 
from Sec. Sec.  226.52(a) and 226.53(a)(3).
    (c) Existing lease and collective bonds will cover all unplugged 
wells located on the subject lease(s) that the lessee of record drilled 
and completed, operated, or controlled prior to [effective date of 
final rule] according to the Osage Agency's records. For purposes of 
this section, a lessee is considered to ``control'' all unplugged wells 
located on the lease that are recorded in the Osage Agency's plat book 
or that a purchaser exercising reasonable diligence could or should 
have known of at the time the lease or assignment was executed, except 
for orphan wells.
    (d) Lessees with existing lease and collective bonds must file 
performance bonds that comply with the requirements set forth in this 
subpart for all wells they propose to drill, reenter, recomplete, and 
accept via assignment after [effective date of final rule].
    (e) Existing lease and collective bonds will be considered an 
acceptable form of financial security for the lessee of record on 
[effective date of final rule] only. The right to maintain existing 
lease and collective bonds cannot be conveyed to any other person 
through assignment, a transfer of operating rights or working 
interests, or otherwise. All future lessees, including assignees, of 
leases with grandfathered lease or collective bonds must file 
performance bonds that comply with the requirements set forth in this 
subpart.


Sec.  226.50  Bond obligations.

    (a) The lessee must file a performance bond conditioned upon 
compliance with the terms and conditions of the lease and the 
regulations in this part prior to drilling, reentering, and 
recompleting wells or accepting responsibility for wells through 
assignment. The lessee must also file a performance bond for all 
saltwater disposal (SWD) easements.
    (b) Performance bonds must be in one of the following forms:
    (1) Surety bond issued by a qualified surety company approved by 
the Department of the Treasury (see Department of the Treasury Circular 
No. 570);
    (2) Certificate of deposit issued by a financial institution, the 
deposits of which are federally insured, explicitly granting the 
Superintendent the full authority to demand immediate payment in the 
event of default;
    (3) Cashier's check;
    (4) Certified check;
    (5) Negotiable Treasury securities of the United States of a value 
equal to the amount specified in the bond and including a proper 
conveyance to the Superintendent of the full authority to sell such 
securities in the event of default; or
    (6) Irrevocable letter of credit issued by a financial institution, 
the deposits of which are federally insured, for a specific term, 
identifying the Superintendent as the sole payee with full authority to 
demand immediate payment in the event of default and subject to the 
following requirements:
    (i) The letter of credit must be issued by a financial institution 
organized or authorized to do business in the United States;
    (ii) The letter of credit must be irrevocable during its term. A 
letter of credit used as security for any well(s) that have been 
drilled, but for which final approval of abandonment has not been 
given, shall be forfeited and collected by the Superintendent if not 
replaced by a suitable bond or letter of credit at least 30 calendar 
days before its expiration date;
    (iii) The letter of credit must be payable to the Superintendent 
upon demand, in full or in part, upon receipt of a notice of attachment 
from the Superintendent stating the basis therefore (e.g., default or 
failure to file a replacement in accordance with paragraph (c)(5)(ii) 
of this section);
    (iv) The initial expiration date of the letter of credit must be at 
least one year following the date it is filed with the Superintendent; 
and
    (v) The letter of credit must contain a provision for automatic 
renewal for periods of not less than one year in the absence of notice 
to the Superintendent at least 90 calendar days prior to the original 
or extended expiration date.


Sec.  226.51  Individual well bond requirements.

    (a) After [effective date of final rule], individual performance 
bonds must be filed for:
    (1) Each well the lessee proposes to drill, reenter, recomplete, or 
accept responsibility for through assignment; and
    (2) Each SWD well under an approved SWD easement.
    (b) Individual well bonds must be in the amount of not less than $6 
per foot of the measured well depth for each existing well or the 
projected well depth for each proposed well.
    (c) Individual well bonds must be filed with the permit 
application, executed assignment, or executed SWD easement.


Sec.  226.52  Countywide and nationwide bond requirements.

    (a) In lieu of an individual well bond, the lessee may file a 
countywide bond in the amount of not less than $75,000 covering all 
leases of, and SWD easements within, the Osage Mineral Estate to which 
the lessee is, or may become, a party. The total lease acreage covered 
by a single countywide bond cannot exceed 10,240 acres.
    (b) In lieu of individual well or countywide bonds, the lessee may 
file a $150,000 nationwide bond covering all leases to which the lessee 
is, or may become, a party in the United States and all SWD easements 
to which the lessee is, or may become, as party within the Osage 
Mineral Estate.
    (c) Countywide and nationwide bonds must be filed with the executed 
lease, assignment, or SWD easement.


Sec.  226.53  Authorization to increase the required bond amount.

    (a) The Superintendent may require an increase in the amount of any 
bond, including grandfathered bonds, if the:
    (1) The lessee defaults on an obligation incurred under the lease, 
approved permits, the regulations in this part, or applicable orders 
and notices;
    (2) The lessee is deemed high risk due to a history of lease 
violations in Osage County; enforcement action by other Federal or 
state agencies; unpaid royalties, civil penalties, or other amounts due 
and owing; or other factors; or
    (3) The total estimated cost of plugging existing wells exceeds the 
present bond amount.
    (b) The Superintendent may increase the bond amount to any level, 
but in no circumstances will the bond amount exceed the sum of the 
amounts owed for prior violations that remain outstanding, the amount 
of uncollected royalties or other amounts due, and the total estimated 
costs of plugging.


Sec.  226.54  Bond forfeiture.

    (a) The Superintendent may call for forfeiture of all or part of a 
performance bond if the lessee defaults on, refuses to comply with, or 
otherwise fails to satisfy an obligation incurred under a lease, 
approved permit, the regulations in this part, or applicable notices 
and orders.

[[Page 2466]]

    (b) Where the surety makes payment to the Superintendent due to 
default, the face amount of the bond and the surety's liability 
thereunder will be reduced by the amount of such payment.
    (c) If the value of the bond is reduced due to default, and the 
obligation in default is less than or equal to the face amount of the 
bond, the lessee must either restore the existing bond or post a new 
bond. If the obligation in default exceeds the face amount of the bond, 
the lessee must make full payment to the BIA for all costs incurred 
that are in excess of the face amount of the bond and must post a new 
bond. If the lessee fails to make full payment for all such 
obligations, the United States or Osage Minerals Council may take 
action to recover from the lessee all costs in excess of the amount 
collected under the bond. The United States has sole discretion 
regarding whether to take action to recover costs and nothing in this 
section will be construed as imposing an obligation on the United 
States to take such action.
    (d) The lessee must restore the existing bond or post a new bond 
under paragraph (c) of this section within six months of receiving the 
notice of default, or such shorter period as the Superintendent may 
specify.
    (e) Failure to restore or replace a deficient bond may subject the 
lease(s) of, and SWD easements within, the Osage Mineral Estate covered 
by the bond to cancellation under Sec.  226.165.


Sec.  226.55  Termination of the period of liability and release of 
bonds.

    (a) The Superintendent will not terminate the period of liability 
or release a bond unless an acceptable replacement bond has been filed 
or all obligations incurred under the lease, approved permits, 
regulations in this part, and applicable notices and orders have been 
satisfied.
    (b) Termination of the period of liability ends the period during 
which obligations accrue but does not relieve the surety of 
responsibility for obligations that accrued during the period of 
liability. Release of the bond relieves the surety of all liability.

Geophysical Exploration Bonds


Sec.  226.56  Geophysical exploration bond requirements.

    (a) Lessees and permittees must file a bond conditioned on 
compliance with the terms and conditions of the geophysical exploration 
permit and the regulations in this part prior to commencing exploration 
operations. The bond must be in one of the forms identified in Sec.  
226.50(b).
    (b) A lessee holding a valid lease of the Osage Mineral Estate 
under this part for which the required performance bond has been 
posted, may conduct geophysical exploration operations on the covered 
lease without further bonding.
    (c) A lessee holding a valid lease of the Osage Mineral Estate for 
which an individual well bond has been posted who wishes to explore 
unleased lands, must post a geophysical exploration bond in accordance 
with paragraph (d) of this section. A lessee holding a valid lease of 
the Osage Mineral Estate for which a countywide or nationwide bond has 
been posted who wishes to explore unleased lands, may obtain a bond 
rider to include geophysical exploration operations.
    (d) Individual exploration bonds in the amount of $5,000 must be 
filed with each geophysical exploration permit. In lieu of individual 
exploration bonds, lessees and permittees may file a countywide bond in 
the amount of $25,000 covering all exploration operations within Osage 
County or a nationwide bond in the amount of $50,000 covering all 
exploration operations within the United States.


Sec.  226.57  Bond forfeiture.

    The Superintendent may call for forfeiture of all or part of the 
bond posted for geophysical exploration operations if the lessee or 
permittee defaults on, refuses to comply with, or otherwise fails to 
satisfy an obligation incurred under the geophysical exploration 
permit, the regulations in this part, or applicable notices and orders.


Sec.  226.58  Termination of the period of liability and release of 
bonds.

    (a) The Superintendent will not terminate the period of liability 
or release a geophysical exploration bond unless all obligations 
incurred under the geophysical exploration permit and the regulations 
in this part have been satisfied.
    (b) Terminating the period of liability ends the period during 
which obligations accrue but does not relieve the surety of 
responsibility for obligations that accrued during the period of 
liability. Release of the bond relieves the surety of all liability.

Subpart H--Operations

General Requirements


Sec.  226.59  Conduct of operations.

    (a) Lessees and permittees must comply with the terms and 
conditions of the lease and approved permits, the regulations in this 
part, orders and notices the Superintendent issues, and all other 
applicable laws and regulations in the conduct of all operations.
    (b) Lessees and permittees must conduct all exploration, testing, 
development, production, and other operations in a safe and workmanlike 
manner that:
    (1) Protects the leased or permitted lands and improvements 
thereon;
    (2) Protects natural resources, cultural resources, and 
environmental quality;
    (3) Protects health and safety;
    (4) Ensures proper management, measurement, disposition, and 
security of production; and
    (5) Results in the maximum ultimate recovery of oil and gas with 
minimum waste and minimal adverse effect on the recovery of other 
mineral resources.
    (c) Lessees and permittees must not commit waste on leased or 
permitted lands, nor allow avoidable nuisance to be maintained thereon.
    (d) Lessees and permittees must use and maintain all installations 
and equipment in a manner that ensures structural and mechanical 
integrity, proper function, and the safe conduct of operations at the 
location of the installation or equipment.
    (e) Lessees and permittees must comply with the National Electrical 
Code in the installation, operation, maintenance, and use of all 
electrical lines.


Sec.  226.60  Inspection of operations.

    (a) The Superintendent has the right to enter or travel across any 
lands covered by a lease or permit for the purpose of conducting an 
inspection or investigation.
    (b) The Superintendent may conduct inspections and investigations 
with or without advance notice to the lessee or permittee. Inspections 
and investigations may take place at any time but will normally be 
conducted during those hours when responsible persons are expected to 
be present at the site being inspected or investigated.
    (c) Lessees and permittees must allow the Superintendent to inspect 
and investigate:
    (1) Lands covered by the lease or permit;
    (2) Operations; and
    (3) Improvements, facilities, structures, fixtures, and equipment 
located on leased or permitted lands and any records of design, 
construction, maintenance, or repairs relating thereto.

Commencement of Operations


Sec.  226.61  No operations may commence prior to approval of a lease 
or geophysical exploration permit.

    No operations may commence on any tract of land until the 
Superintendent

[[Page 2467]]

approves a lease or geophysical exploration permit covering such land.


Sec.  226.62  Prior authorization required to commence operations on 
trust or restricted lands.

    (a) No operations are permitted on trust or restricted lands 
without the Superintendent's approval.
    (b) If an Indian landowner is unwilling to allow the commencement 
of operations on their lands, the Superintendent will conduct an 
examination of the lands with the Indian landowner and lessee or 
permittee. If the Superintendent determines that the interests of the 
Osage Nation require that the lands be developed or explored, they will 
instruct the parties to reach an agreement under which operations may 
be conducted.
    (c) If the Indian landowner and lessee or permittee cannot reach an 
agreement under paragraph (b) of this section, the parties must present 
the matter to the Osage Minerals Council, which will issue a written 
recommendation. The Osage Minerals Council's recommendation will be 
considered final and binding upon the Indian landowner and lessee or 
permittee. A guardian or authorized representative may represent the 
Indian landowner before the Osage Minerals Council. If no such guardian 
or authorized representative exists, or where the Superintendent 
determines that there is no proper party to speak for an Indian 
landowner of unsound mind, the Principal Chief of the Osage Nation will 
represent the Indian landowner.
    (d) If the Indian landowner or their guardian or authorized 
representative fails to appear before the Osage Minerals Council as 
required, or the Osage Minerals Council fails to act within 10 calendar 
days after the matter is referred for recommendation, the 
Superintendent may authorize the lessee or permittee to proceed with 
operations.


Sec.  226.63  Notice and information to be given to surface owners 
prior to commencement of operations.

    (a) The lessee or permittee must meet with the surface owner prior 
to the commencement of any operations on leased or permitted lands, 
except for archeological or biological surveying and the staking of 
wells.
    (b) For operations other than those identified in paragraph (a) of 
this section, the lessee or permittee must send the surface owner a 
written request for a meeting by certified mail. The meeting must be 
held at least 10 calendar days prior to the commencement of operations 
unless the Superintendent waives such requirement, or the parties agree 
otherwise. At the meeting, the lessee or permittee must:
    (1) Indicate the location of the well(s), shot holes to be drilled, 
or seismic survey site;
    (2) Arrange for a route of ingress and egress. If the lessee or 
permittee and surface owner fail to agree on a route of ingress and 
egress, the Superintendent will set the route; and
    (3) Provide the name and address of the representative upon whom 
the surface owner must serve any claim for damages that may be 
sustained from operations and the procedure for the settlement of such 
claims as set forth in Sec.  226.83.
    (c) Where operations will occur on trust or restricted land, the 
lessee or permittee must conduct the meeting required under paragraph 
(b) of this section with the Superintendent and, if possible, the 
Indian landowner.
    (d) If the surface owner cannot be contacted at their last known 
address or has not accepted the meeting request within 30 calendar days 
of receipt thereof, the Superintendent will authorize the lessee or 
permittee to commence operations.


Sec.  226.64  Payment of commencement money and tank siting fees to the 
surface owner.

    (a) Prior to commencing drilling, reentry, or geophysical 
exploration operations, the lessee or permittee must pay the surface 
owner commencement money in the amount of:
    (1) $1,500 per well to be drilled or reentered;
    (2) $25 per seismic shot hole; and
    (3) $12 per acre, or fraction thereof, occupied by the lessee or 
permittee while conducting a seismic survey.
    (b) The lessee must pay the surface owner $200 per tank for each 
tank to be sited on the leased lands, except for tanks temporarily set 
on well sites for drilling, completion, or testing purposes only.
    (c) Commencement money and tank siting fees must be paid in full 
prior to the commencement of operations or siting of tanks on the 
lease, subject to the exception set forth in paragraph (e) of this 
section.
    (d) Where the surface estate is trust or restricted land, 
commencement money and tank siting fees must be paid to the 
Superintendent for the Indian landowner.
    (e) Where the surface estate is not trust or restricted land, 
commencement money and tank siting fees must be paid to the surface 
owner directly. If the surface owner is not a resident of Osage County, 
such payment must be sent by certified mail to the surface owner's last 
known address. If the payment is returned as undeliverable or the 
surface owner refuses to accept the payment, the commencement money or 
tank siting fees will be deemed forfeited. Nothing herein affects the 
surface owner's right to the settlement of surface damages under 
Sec. Sec.  226.82 and 226.83.
    (f) Commencement money and tank siting fees are a credit toward the 
settlement of surface damages. The surface owner's acceptance of 
commencement money and tank siting fees does not affect their right to 
compensation for damages occasioned by operations. A settlement 
covering the actual surface damages resulting from drilling, reentry, 
or geophysical exploration operations does not need to be paid until 
such operations are complete.

Drilling, Workover, and Well Abandonment Operations


Sec.  226.65  Use of surface lands and water for operations.

    (a) The lessee has the right to use so much of the surface of the 
leased lands as may be reasonable for the development, extraction, 
marketing, and sale of oil and gas. The right to use the surface lands 
includes the right-of-way for ingress and egress to any point of 
operations. The right to surface lands also includes, but is not 
limited to, the right to install and maintain pipelines, electric 
lines, and other necessary equipment and facilities. The Superintendent 
will determine the routing of pipelines and electric lines, as well as 
the siting of equipment and facilities of the lessee and surface owner 
are unable to agree.
    (b) Drilling sites must be held to the minimum area essential for 
operations and must not exceed the acreage set forth in the approved EA 
unless the Superintendent authorizes such expansion in writing.
    (c) The lessee may use water from natural water courses for 
approved lease operations, provided that such use does not diminish the 
supply below the requirements of the surface owner from whose land the 
water is taken.
    (d) The lessee may use water from reservoirs formed by the 
impoundment of water from natural water courses for approved lease 
operations, provided that such use does not exceed the quantity to 
which the lessee would originally have been entitled had the reservoirs 
not been constructed.
    (e) The lessee may install necessary lines and other equipment 
within the

[[Page 2468]]

Osage Mineral Estate to obtain water in accordance with paragraphs (c) 
and (d) of this section. If any such installation will be over or 
across surface lands that are held in trust or restricted status, the 
lessee must obtain a right-of-way pursuant to part 169 of this title 
prior to commencing the necessary installation operations. Any damages 
resulting from installations to obtain water must be settled as 
provided in Sec.  226.83.


Sec.  226.66  Drilling operations.

    (a) The lessee must submit an Application for Permit to Drill, 
together with any required information or documentation, for each well 
to be drilled or reentered. No drilling or reentry operations, or 
surface disturbance preliminary thereto, may commence prior to the 
Superintendent's approval of the permit.
    (b) The Superintendent will not accept an application for a permit 
to drill unless it is administratively complete.
    (c) The lessee must notify the Superintendent of planned drilling 
or reentry operations at least five business days prior to the 
commencement thereof. The Superintendent may witness such operations 
without advance notice.
    (d) The lessee may not drill, or conduct surface disturbance 
preliminary to drilling, within 300 feet of the boundary line of leased 
lands without the Superintendent's approval. The lessee may not locate 
a well or tank within 200 feet of any Federal, state, county, or 
municipal road or highway that is owned and maintained for public use; 
any intermittent, ephemeral, or perennial streams or water sources; or 
any building used as a residence, granary, or barn without the 
Superintendent's approval. Failure to obtain such approval will result 
in the assessment of civil penalties under Sec.  226.161 and the 
issuance of an order to immediately plug the well or remove the tank(s) 
and may subject the lease to cancellation under Sec.  226.165.
    (e) The lessee must submit a subsequent Well Completion or Reentry 
Report following drilling and reentry operations in accordance with 
Sec.  226.74(c) through (g).


Sec.  226.67  Well control.

    (a) Drilling wells. The lessee must take the necessary precautions 
to keep wells under control and must use and maintain materials and 
equipment necessary to ensure the safety of operating conditions and 
procedures.
    (b) Vertical drilling. The lessee must conduct drilling operations 
in a manner that prevents the completed well from deviating 
significantly from the vertical unless the Superintendent's prior 
approval of such deviation is obtained. The lessee must promptly report 
any well that deviates significantly from the vertical without prior 
approval to the Superintendent and conduct a directional survey. For 
purposes of this section, significant deviation means a projected 
deviation of the well bore from the vertical of 10 degrees or more or a 
projected bottom hole location that may be less than 300 feet from the 
lease boundary.
    (c) High pressure or loss of circulation. The lessee must take 
immediate steps to maintain or restore control of any well in which the 
pressure equilibrium becomes unbalanced.


Sec.  226.68  Use of gas for artificial lifting of oil.

    A lessee with an oil-only lease executed prior to [effective date 
of final rule] is prohibited from using gas from a distinct or separate 
stratum for the purpose of flowing or lifting oil. A lessee with a 
combined oil and gas lease may use gas from a distinct or separate 
stratum for the purpose of flowing or lifting oil subject to the 
requirements set forth in Sec. Sec.  226.144 through 226.151.


Sec.  226.69  Workover operations.

    (a) The lessee must submit an Application for Permit to Workover 
Wells, together with any required information or documentation, for 
each well to be worked over. The following workover operations, and 
surface disturbance preliminary thereto, may not commence prior to the 
Superintendent's approval of the permit:
    (1) Recompletion;
    (2) Deepening, plugging back, or converting a well;
    (3) Formation treatments and acidizing jobs, including acid 
fracturing;
    (4) Hydraulic fracturing; and
    (5) Pulling or altering the casing.
    (b) The Superintendent will not accept an application for a 
workover permit unless it is administratively and technically complete.
    (c) The lessee must notify the Superintendent of planned 
recompletion, deepening, and hydraulic fracturing operations at least 
five business days prior to the commencement thereof. The lessee does 
not need to provide notice prior to commencement of the other workover 
operations identified in paragraph (a) of this section. The 
Superintendent may witness any workover operations without advance 
notice.
    (d) The lessee must submit a subsequent Report of Workover 
Operations following all workover operations identified in paragraph 
(a) of this section in accordance with Sec.  226.74(c) through (g).
    (e) Prior approval and a subsequent report of operations are not 
required for well cleanout work, well maintenance, or bottom hole 
pressure surveys. The operations listed in paragraph (a) of this 
section do not qualify as well cleanout work or well maintenance.


Sec.  226.70  Requirements for operations in Hydrogen Sulfide (H2S) 
areas.

    (a) Testing requirements. (1) The lessee must conduct an initial 
test of the H2S concentration of the gas stream for each 
well and production facility completed and make the results of such 
test(s) available to the Superintendent upon request.
    (2) The lessee must determine the radius of exposure for each well 
and production facility having an H2S concentration of 100 
ppm or more in the gas stream and submit a report of such calculations 
to the Superintendent. The radius of exposure must be calculated as 
follows:
    (i) For determining the 100-ppm radius of exposure where the 
H2S concentration in the gas stream is less than 10 percent:

X = [(1.589)(H2S Concentration)(Q)](0.6258)

    (ii) For determining the 500-ppm radius of exposure where the 
H2S concentration in the gas stream is less than 10 percent:

X = [(0.4546)(H2S Concentration)(Q)](0.6258)

Where:

X = radius of exposure in feet
H2S Concentration = decimal equivalent of the mole or 
volume fractions of the H2S in the gaseous mixture
Q = maximum volume of gas determined to be available for escape, or 
escape rate, in cubic feet per day (at standard condition of 14.73 
psia and 60 [deg]F)

    (iii) For determining the 100-ppm or 500-ppm radius of exposure 
where the H2S concentration in the gas stream is 10 percent 
or greater, the lessee must use an air dispersion model approved by the 
EPA, or such another method the Superintendent approves.
    (3) The lessee must calculate the radius of exposure pursuant to 
paragraph (a)(2) of this section for each well and production facility 
completed prior to [effective date of final rule] that has a 
H2S concentration of 100 ppm or greater in the gas stream 
and submit a report of such calculations to the Superintendent on or 
before [six months from effective date of final rule].

[[Page 2469]]

    (4) If a change in operations or production results in an increase 
in the H2S concentration or radius of exposure of five 
percent or more as calculated pursuant to paragraph (a)(2) of this 
section, the lessee must notify the Superintendent in writing of such 
increase within 60 calendar days of identification of the change.
    (b) Public protection. (1) The lessee must report any release of a 
potentially hazardous volume of H2S to the Superintendent as 
soon as practicable, but not later than 24 hours following 
identification of the release.
    (2) The lessee must submit a Public Protection Plan providing a 
detailed plan of action for alerting and protecting the public in the 
event of a release of a potentially hazardous volume of H2S 
when any of the following conditions apply:
    (i) The 100-ppm radius of exposure is greater than 50 feet and 
includes any part of a residence, school, church, place of business, or 
other area the public can reasonably be expected to frequent;
    (ii) The 500-ppm radius of exposure is greater than 50 feet and 
includes any part of a Federal, state, county, or municipal road or 
highway that is owned and maintained for public use; or
    (iii) The 100-ppm radius of exposure is greater than or equal to 
3,000 feet.
    (3) The details of the Public Protection Plan may vary according to 
site-specific characteristics expected to be encountered and the 
proximity and density of the population at risk. All plans must include 
the following:
    (i) The lessee's name and phone number;
    (ii) The names, phone numbers, and responsibilities of key 
personnel;
    (iii) The names and phone numbers of residents within the radius of 
exposure;
    (iv) The names and phone numbers of the responsible parties for 
each of the schools, churches, businesses, roads, highways, or other 
public areas or facilities within the radius of exposure;
    (v) A call list including the Osage Agency, Osage Minerals Council, 
Federal and state regulatory agencies, local law enforcement, local 
fire departments, and other public safety personnel;
    (vi) Instructions and procedures for notifying the Osage Agency, 
Osage Minerals Council, and public of an emergency;
    (vii) Instructions and procedures for notifying Federal and state 
regulatory agencies, local law enforcement, local fire departments, and 
public safety personnel of an emergency and requesting their response;
    (viii) A plat showing the location of residences, schools, 
churches, places of business, roads, highways, or other areas the 
public may reasonably be expected to frequent within the radius of 
exposure;
    (ix) Advance briefing of residences, schools, and churches within 
the 100-ppm radius of exposure. Advance briefing may be conducted in-
person or by certified letter and must provide:
    (A) Information regarding the characteristics and hazards of 
H2S and SO2;
    (B) A list of possible sources of H2S and SO2 
within the radius of exposure;
    (C) Detailed instructions for reporting a gas leak to the lessee;
    (D) Information regarding the necessity of having an emergency 
action plan;
    (E) The way the public will be notified of an emergency; and
    (F) The steps that should be taken in the event of an emergency;
    (x) The title(s) or position(s) of the individuals authorized by 
the lessee to ignite escaping gas, circumstances under which those 
individuals may ignite escaping gas, and way in which escaping gas will 
be ignited;
    (xi) Procedures for monitoring H2S and SO2 
levels and wind direction, maintaining site security, controlling 
access to the affected site, and implementing any other measures 
necessary to monitor the situation and protect the public until the 
release is contained; and
    (xii) A description of the detection system(s) that will be used to 
determine the concentration of H2S released in the event of 
a release from a production facility.
    (4) The Public Protection Plan must be activated immediately upon 
detection of the release of a potentially hazardous volume of 
H2S. The lessee must notify the Superintendent of activation 
of the Public Protection Plan.
    (5) A copy of the Public Protection Plan must be maintained at the 
well site, production facility, or such other location on the lease 
that the plan is readily accessible if activation is required.
    (6) The lessee must review the Public Protection Plan on an annual 
basis and submit any revisions to the Superintendent.
    (c) Operating requirements for drilling, completion, and workover 
operations. (1) If the lessee encounters zones containing 
H2S concentrations in excess of 100 ppm while drilling with 
air, gas, mist, or other non-mud circulating mediums for aerated mud, 
the well must be killed with water-based or oil-based drilling mud, and 
thereafter, mud must be used as the circulating medium for continued 
drilling.
    (2) A flare system meeting the following requirements must be 
installed to safely gather and burn H2S-bearing gas:
    (i) Flare lines must be located as far from the operating site as 
feasible and must compensate for changes in wind direction;
    (ii) Flare lines must be straight unless targeted with running 
tees; and
    (iii) The flare system must be equipped with a safe means of 
ignition.
    (3) The lessee must check the SO2 level in the flare 
impact area using portable detection equipment at any site where 
SO2 may be released due to the flaring of H2S 
during drilling, completion, or workover operations. The lessee must 
implement the Public Protection Plan if the flare impact area reaches a 
sustained ambient threshold of 2 ppm or greater of SO2 in 
air and includes any part of a residence, school, church, place of 
business, or other area the public can reasonably be expected to 
frequent.
    (4) The lessee must install a remote-controlled choke or valve for 
all H2S drilling operations and, where feasible, completion 
operations.
    (d) H2S training and safety requirements. (1) The lessee must 
provide appropriate H2S training for all personnel 
including, but not limited to, training regarding:
    (i) The hazards and characteristics of H2S;
    (ii) The effect of H2S on metal components of the well 
system;
    (iii) The operation of safety equipment;
    (iv) First aid procedures in the event of exposure; and
    (v) Emergency response procedures and evacuation routes if there is 
a release of a potentially hazardous volume of H2S.
    (2) The lessee must ensure that the following safety equipment is 
available for use on the lease and maintained in good working 
condition:
    (i) Protective breathing apparatus for personnel;
    (ii) Communication devices that can be used with protective 
breathing apparatus; and
    (iii) A flare gun and flares to ignite the well.
    (3) Each drilling and well completion site must have an 
H2S detection and monitoring system that automatically 
activates audible and visible alarms when the ambient air concentration 
of H2S reaches 10 ppm. The system must have rapid response 
sensors capable of sensing a minimum of 10 ppm of H2S

[[Page 2470]]

in ambient air, with at least three sensing points located at the shale 
shaker, rig floor, and bell nipple for a drilling site, and the cellar, 
rig floor, and circulating tanks or shale shaker for a well completion 
site. During workover operations, one sensing point must be located as 
close as possible to the wellbore. The lessee must maintain a record of 
all tests of the H2S monitoring system and make such records 
available to the Superintendent upon request.
    (4) The lessee must install at least one wind direction indicator 
at a location that is visible at all times during drilling, completion, 
and workover operations.
    (5) The lessee must display a red flag at the entrance to the well 
or production facility site when H2S is detected in excess 
of 10 ppm at any detection point.
    (6) The lessee must post danger or caution signs on all roads and 
controlled access routes to the well or production facility site. The 
lessee must post a danger or caution sign a minimum of 200 feet, but no 
more than 500 feet, from the well or production facility site at a 
location that allows vehicles to turn around at a safe distance. Signs 
must meet the following requirements:
    (i) Signs must be prominently displayed, legible, and large enough 
to be read from the road or entrance to the site;
    (ii) Signs must be visible to all personnel and members of the 
public approaching the site under normal lighting and weather 
conditions;
    (iii) Signs must read ``Danger--Poison Gas--Hydrogen Sulfide'' or 
``Caution--Poison Gas May Be Present--H2S;'' and
    (iv) Signs must be painted high-visibility red, white, and black, 
or yellow and black.
    (7) Storage tanks that are utilized as part of production 
operations and are operated at or near atmospheric pressure, where the 
vapor accumulation has an H2S concentration of 500 ppm or 
greater in the tank, are subject to the following requirements:
    (i) All stairs and ladders leading to the top of the storage tank 
must be chained and marked to restrict entry;
    (ii) The lessee must install at least one wind direction indicator 
at the storage tank site; and
    (iii) The lessee must post a danger or caution sign on the storage 
tank or within 50 feet thereof. The sign must comply with the 
requirements set forth in paragraphs (c)(6)(i) through (iv) of this 
section.
    (8) Production facilities with a H2S concentration of 
100 ppm or greater in the gas stream are subject to the following 
requirements:
    (i) The lessee must install at least one wind direction indicator 
at the production facility site. If the production facility and storage 
tank(s) are located at the same site, only one indicator is required;
    (ii) The lessee must post a danger or caution sign within 50 feet 
of the production facility. The sign must comply with the requirements 
set forth in paragraphs (c)(6)(i) through (iv) of this section. If the 
facility is fenced, the sign may be posted on the gate; and
    (iii) The lessee must post danger or caution signs at each location 
where a well flowline or lease gathering line crosses lease or public 
roads. The signs must be posted on each side of the road, as close to 
the pipeline as possible, and must contain the name of the lessee and a 
24-hour phone number.
    (9) The lessee must install automatic safety valves or shutdowns at 
the wellhead, or other appropriate shut-in controls for wells equipped 
with artificial lift, where the H2S 100-ppm radius of 
exposure includes any part of a residence, school, church, place of 
business, or other area the public may be reasonably expected to 
frequent. Such valves must be set to activate upon the release of a 
potentially hazardous volume of H2S.
    (10) All equipment that has the potential to be exposed to 
H2S must be suitable for the H2S working 
environment.


Sec.  226.71  Surveys, samples, and tests.

    (a) The Superintendent may require the lessee to conduct tests, run 
logs, and take any other surveys necessary to determine the following 
during the drilling and completion of a well:
    (1) The presence, quantity, and quality of oil and gas;
    (2) The presence and quality of water;
    (3) The amount and direction of deviation of any well from the 
vertical; and
    (4) The formations drilled and relevant characteristics of the oil 
and gas reservoirs penetrated.
    (b) After a well is completed, the lessee must conduct periodic 
well tests to determine the quality and quantity of the oil, gas, and 
water. The Superintendent may determine the method and frequency of 
such tests.
    (c) The Superintendent may require the lessee to conduct reasonable 
tests of the mechanical integrity of downhole equipment.


Sec.  226.72  Temporary abandonment.

    A lessee may not temporarily abandon, shut down, or otherwise 
discontinue the use or operation of any producing well for more than 30 
calendar days without the Superintendent's prior approval. The lessee 
must submit a request for temporary abandonment to the Superintendent 
in writing, together with any relevant supporting documentation, for 
each well to be temporarily abandoned. Wells cannot be temporarily 
abandoned prior to the Superintendent's approval of such request.


Sec.  226.73  Permanent plugging and abandonment operations.

    (a) A lessee may not permanently abandon a newly completed or 
recompleted well unless oil and gas is not encountered in paying 
quantities.
    (b) A lessee may not permanently abandon a producing well without 
the Superintendent's approval.
    (c) The lessee must promptly plug dry and permanently abandoned 
wells in a manner that protects formations bearing fresh water, 
saltwater, oil, gas, and other minerals.
    (d) The lessee must submit an Application for Permit to Plug Wells, 
together with evidence that the well is no longer capable of producing 
in paying quantities, proposed plugging instructions, and any other 
required information or documents, for each well to be permanently 
plugged and abandoned. No plugging and abandonment operations may 
commence prior to the Superintendent's approval of the permit.
    (e) The Superintendent will not accept an application for a 
plugging permit unless it is administratively and technically complete.
    (f) The lessee must notify the Superintendent of planned plugging 
operations at least five business days prior to the commencement 
thereof. The Superintendent may witness such operations without advance 
notice.
    (g) The lessee must submit a subsequent Report of Plugging 
Operations in accordance with Sec.  226.74(c) through (g).
    (h) Upon written agreement with the surface owner, the lessee may 
condition a well that is being plugged and abandoned for use as a fresh 
water supply source for the surface owner. The lessee must file a copy 
of any such agreement with the Superintendent. The surface owner 
assumes all risk for the use of a reconditioned well as a fresh water 
supply source.


Sec.  226.74  Well records and reports.

    (a) The lessee must keep accurate and complete records for all 
lease operations and submit reports thereof as required by the 
Superintendent and the regulations in this part. The lessee must make 
all books and records available to

[[Page 2471]]

the Superintendent for inspection upon request.
    (b) Records for operations including, but not limited to, the 
drilling, reentry, recompletion, deepening, repair, conversion, 
plugging and abandonment of all wells must show:
    (1) All formations penetrated, the content and character of the 
oil, gas, and water in each formation, and the kind, weight, size, 
landed depth, and cement record of casing used;
    (2) The record of drill-stem and other bottom hole pressure or 
fluid sample surveys, temperature surveys, directional surveys, or 
reports;
    (3) The materials and procedures used in the treating or plugging 
of wells or the preparation of wells for temporary abandonment; and
    (4) Any other information obtained during well operations.
    (c) The lessee must submit the following to the Superintendent 
within 10 calendar days after the completion of operations on any well, 
or any required sampling, testing, or surveying thereof:
    (1) A subsequent report of operations on the required form;
    (2) A copy of the results of all samples, tests, and surveys 
required under this subpart;
    (3) A copy of the electrical, mechanical, and radioactive logs or 
any other surveys of the well bore; and
    (4) The core analysis obtained from the well, if available.
    (d) For plugging operations, the lessee must submit copies of all 
cementing service tickets together with the subsequent report of 
operations.
    (e) For hydraulic fracturing operations, the lessee must submit the 
following information together with the subsequent report of 
operations:
    (1) The total volume of water used;
    (2) The total volume of base fluid used;
    (3) The type of base fluid used;
    (4) The trade name, supplier, general purpose, ingredients, 
Chemical Abstract Service (CAS) Number, and maximum ingredient 
concentration in the hydraulic fracturing fluid (percent by mass), for 
each chemical additive or other substance added to the base fluid or, 
if such chemical identity information is withheld under paragraph (f) 
of this section, the generic chemical name or a similar descriptor for 
the chemical;
    (5) The actual, estimated, or calculated fracture length, height, 
and direction;
    (6) The actual measured depth of perforations and shots per foot or 
the open-hole interval; and
    (7) The total volume of fluid recovered between completion of the 
last stage of the hydraulic fracturing operation and the point at which 
the lessee begins reporting water produced from the well to ONRR.
    (f) If the lessee or owner of the information claims that any 
information that must be reported under paragraph (e) of this section 
is exempt from public disclosure, the information may be withheld. If 
information is withheld, the lessee must submit a Withholding of 
Proprietary Hydraulic Fracturing Information form with the report.
    (g) The Superintendent may require a lessee to submit any 
information withheld under paragraph (f) of this section. The 
Superintendent will maintain the confidentiality of the information 
unless they determine that the information is not exempt from public 
disclosure. The Superintendent will provide the lessee with written 
notice of any such determination.
    (h) The lessee must maintain and preserve records and reports 
required under this section for six years from the date they were 
generated, unless the Superintendent provides written notice to the 
lessee that an audit or investigation is being conducted and the 
records must be maintained for a longer period. If an audit or 
investigation of the records is being conducted, the lessee must 
maintain the records until the Superintendent issues a written release 
of such obligation.


Sec.  226.75  Well and facility identification.

    (a) The lessee must properly identify each well located on the 
lease, excluding those wells that have been permanently abandoned, by a 
sign placed in a conspicuous location. The well sign must include the 
well number, lessee's name, lease name, lease number, and legal 
description.
    (b) The lessee must mark each permanently abandoned well located on 
the lease with a permanent monument containing the information required 
under paragraph (a) of this section. The Superintendent reserves the 
right to waive the requirement for a permanent monument.
    (c) The lessee must properly identify all facilities at which oil 
and gas produced from a lease is stored, measured, or processed by a 
sign placed in a conspicuous location. The sign must include the 
lessee's name, lease name, lease number, and legal description.
    (d) All signs required by this section must be maintained in 
legible condition.


Sec.  226.76  Pollution prevention.

    The lessee or permittee must take measures to prevent the 
unauthorized discharge of pollutants and migration of oil, gas, 
saltwater, or other deleterious substances to fresh water or other 
mineral bearing formations during the exploration, development, 
production, and transportation of oil and gas. The lessee or permittee 
must conduct tests and surveys of the effectiveness of the measures 
taken to ensure the protection of fresh water and mineral bearing 
formations and make the results of such tests available to the 
Superintendent upon request.


Sec.  226.77  Storage and disposal of fluids.

    (a) Pits for drilling mud and deleterious substances used in the 
drilling, completion, recompletion, workover, or plugging of any well 
must be constructed and maintained to prevent the pollution of surface 
and subsurface fresh water. The lessee must routinely inspect and 
maintain pits to ensure that there is no fluid leakage into the 
environment.
    (b) Pits constructed after [effective date of final rule] may not 
be located:
    (1) In areas subject to frequent flooding according to the USDA 
Natural Resources Conservation Service (NCRS) Soil Survey;
    (2) Within 300 feet of intermittent or ephemeral streams or water 
sources; or
    (3) Within 500 feet of perennial streams, springs, fresh water 
sources, or wetlands.
    (c) Pits may not be constructed, utilized, enlarged, or relocated 
without the Superintendent's prior approval.
    (d) Immediately after the completion of operations, pits must be 
emptied and leveled as the Superintendent directs or as provided by 
written agreement with the surface owner. The lessee must file a copy 
of any surface owner agreement with the Superintendent.
    (e) All produced water must be disposed of by injection into the 
subsurface, collection in approved pits, or other methods the 
Superintendent authorizes.
    (f) Land application of water-based fluids from pits, tanks, and 
containment vessels; waste oil; waste oil residue; crude oil 
contaminated soil; freshwater drill cuttings; drilling mud; and other 
deleterious substances is not permitted upon any lease without the 
Superintendent's prior approval.


Sec.  226.78  Removal of fire hazards.

    Any material that may constitute a fire hazard must be moved to a 
safe distance from the well site, tanks, and other surface facilities. 
Waste oil must be burned or disposed of in a matter that prevents 
creation of a fire hazard.

[[Page 2472]]

Geophysical Exploration Operations


Sec.  226.79  Applying for a geophysical exploration permit.

    (a) Any party wishing to conduct oil and gas geophysical 
exploration activities on leased or unleased tracts of the Osage 
Mineral Estate must submit an Application for Oil and Gas Geophysical 
Exploration Permit and obtain the Superintendent's approval thereof 
prior to commencing exploratory operations or any surface disturbance 
preliminary thereto.
    (b) Upon approval of an application, the Superintendent will issue 
a geophysical exploration permit that includes the terms and conditions 
deemed necessary to protect mineral resources and other resource 
values. The permit does not grant the permittee any option or 
preference rights to a lease of the subject lands or authorize the 
production, extraction, removal, or sale of oil, gas, or other mineral 
resources therefrom.


Sec.  226.80  Commencement of operations.

    Permittees must notify the Superintendent of planned geophysical 
exploration operations at least five business days prior to the 
commencement thereof. The Superintendent may witness any such 
activities without advance notice.


Sec.  226.81  Records and reports.

    Within 30 calendar days after the completion of geophysical 
exploration operations, the permittee must submit a subsequent Oil and 
Gas Geophysical Exploration Report.

Settlement of Surface Damages


Sec.  226.82  Lessee or permittee required to settle surface damages.

    (a) The lessee or permittee must pay for damages to growing crops, 
improvements on the land, and all other surface damages occasioned by 
operations.
    (b) In the settlement of surface damages on unrestricted lands, all 
sums due and payable must be paid to the surface owner. The surface 
owner must apportion damages among the parties having legal interests 
in the surface as the parties mutually agree or as their interests 
dictate. Parties having legal interests in the surface include, but are 
not limited to, owners, tenants, and surface lessees.
    (c) In the settlement of damages on restricted lands, all sums due 
and payable must be paid to the Superintendent. The Superintendent will 
apportion damages among the surface owner, tenants, and surface lessees 
of record and credit the surface owner's account with the amount of 
damages apportioned.
    (d) Any person claiming an interest in leased trust or restricted 
lands and damages thereto must notify the Superintendent, in writing, 
of the interest claimed and provide any documentation the 
Superintendent requests in support thereof. Failure to submit a written 
statement or the required supporting documentation to the 
Superintendent constitutes a waiver of notice and bars that person from 
asserting a claim for any portion of surface damages after such damages 
have been disbursed.


Sec.  226.83  Procedure for settlement of surface damages.

    If a surface owner, tenant, or surface lessee suffers damages due 
to oil and gas exploration or development operations, the procedure for 
recovery is as follows:
    (a) The aggrieved party or parties must serve written notice upon 
the lessee or permittee as soon as possible after the discovery of any 
damages. The written notice must describe the nature and location of 
the alleged damages, date of occurrence, name of the party or parties 
that caused the damages, and amount of the damages. This requirement 
does not limit the time within which any action must be brought in a 
court of competent jurisdiction to less than the 90-day period allowed 
by section 2 of the Act of March 2, 1929 (45 Stat. 1478, 1479).
    (b) If the alleged damages are not adjusted at the time that 
written notice is served, the lessee or permittee must try to adjust 
the claim with the aggrieved party or parties within 20 calendar days 
of receipt of such notice.
    (c) If the parties fail to adjust the claim within 20 calendar days 
as specified in paragraph (b) of this section, each party has 10 
calendar days to appoint an arbitrator. Immediately upon their 
appointment, the two arbitrators must agree upon a third arbitrator. If 
the two arbitrators fail to agree upon a third arbitrator within 10 
calendar days of their appointment, they must immediately notify the 
parties. If the parties cannot agree upon a third arbitrator within 
five calendar days after receipt of such notice, the Superintendent 
must appoint the third arbitrator.
    (1) All arbitrators must be disinterested persons.
    (2) Where both a surface owner and their tenant(s) or surface 
lessee(s) are injured, the aggrieved parties must join in the 
appointment of an arbitrator. Where an injury is chargeable to more 
than one lessee or permittee, all chargeable lessees or permittees must 
join in the appointment of an arbitrator.
    (3) Each claimant and lessee or permittee must pay the fees and 
expenses for the arbitrator they appoint. The fees and expenses of the 
third arbitrator must be borne equally by the claimant(s) and lessee(s) 
or permittee(s).
    (d) Immediately following the appointment of the third arbitrator, 
the arbitrators must meet, hear the evidence and arguments of the 
parties, and examine the crops, improvements, lands, or other property 
allegedly damaged. Within 10 calendar days thereafter, the arbitrators 
must issue a written decision regarding the amount of damages due and 
serve the decision upon all interested parties. Any two of the 
arbitrators may render the decision as to the amount of damages due.
    (e) Each party has 90 calendar days from the date the arbitrators' 
decision is served to file an action in a court of competent 
jurisdiction challenging the decision. If no such action is filed and 
the arbitration resulted in a decision finding the lessee or permittee 
liable for surface damages, the lessee or permittee must pay all 
damages together with interest assessed from the date of the award at 
the IRS underpayment rate pursuant to 26 U.S.C. 6621(a)(2) within 10 
calendar days after expiration of the period for filing an action in 
court. The IRS underpayment rate is posted quarterly and is available 
online at https://www.irs.gov.
    (f) If the claimant is an Indian landowner, the lessee or permittee 
must submit any surface damages settlement agreement to the 
Superintendent for approval. The settlement agreement must describe the 
nature and location of the damages, date(s) of occurrence, settlement 
amount, and any other pertinent information.

Subpart I--Production and Site Security

General Requirements


Sec.  226.84  Production obligations.

    (a) The Superintendent may order a lessee to promptly drill and 
produce wells on any lease acreage regardless of whether the lessee has 
drilled and paid rental if, in their opinion:
    (1) A prudent lessee would conduct further development; or
    (2) Such drilling is necessary to ensure that the lease is properly 
and timely developed in accordance with sound economic operating 
practices.
    (b) Failure to develop a lease in compliance with the 
Superintendent's order is a violation of the terms and conditions of 
the lease and results in

[[Page 2473]]

termination of the lease by operation of law as to the acreage the 
lessee was ordered to develop.
    (c) The lessee must put all oil and gas produced from the lease 
into marketable condition at no cost to the Osage Nation.
    (d) Where oil accumulates in a pit, such oil must either be 
recirculated through the regular treating system and returned to the 
stock tanks for sale or pumped into a stock tank without treatment and 
measured for sale in the same manner as from any sales tank under the 
regulations in this part.
    (e) Except in an emergency, no oil may be pumped into a pit without 
the Superintendent's prior approval. Each such pumping occurrence must 
be reported to the Superintendent immediately, but not later than the 
next business day, and the oil promptly recovered in accordance with 
applicable orders and notices.


Sec.  226.85  Production reporting.

    (a) The lessee must submit certified monthly production reports to 
ONRR using Form ONRR-4054, Oil and Gas Operations Report, regardless of 
whether there was production during the reporting period, if the lessee 
operates a lease or cooperative agreement upon which one or more wells 
are not permanently plugged and abandoned.
    (b) The lessee must submit Form ONRR-4054 for each well every month 
beginning with the month in which drilling is completed or, if 
production testing is conducted during drilling operations, beginning 
with the month in which testing occurs. Such reporting must continue 
until the lease or cooperative agreement terminates or is cancelled and 
the Superintendent determines that all wells have been permanently 
plugged and abandoned.
    (c) Reports must be received by 4 p.m. mountain time on or before 
the 15th day of the second month following the production month.
    (d) The lessee must submit Form ONRR-4054 electronically via ONRR's 
eCommerce Reporting website, https://onrrreporting.onrr.gov, unless 
they qualify for an exception under paragraph (e) of this section. The 
lessee must enter production data into the system manually or upload 
data files in American Standard Code for Information Exchange (ASCII) 
or Comma Separated Values (.csv) file formats that ONRR specifies. 
Information regarding how to complete and submit Form ONRR-4054 is 
available at https://www.onrr.gov/ReportPay/royalty-reporting.htm.
    (e) The lessee may submit Form ONRR-4054 manually if they:
    (1) Have never reported to ONRR before. In such instance, they have 
three months from the date the first production report is due to begin 
reporting electronically; or
    (2) Have a small business, as defined by the Small Business 
Administration, and do not own a computer.
    (f) Production reports submitted manually via U.S. Postal Service 
must be addressed to: Office of Natural Resources Revenue, P.O. Box 
25627, Denver, CO 80225-0627. Production reports submitted manually via 
courier or overnight delivery service must be addressed to: Office of 
Natural Resources Revenue, Denver Federal Center, Building 85, Room A-
614, 6th Avenue and Kipling Street, Denver, CO 80225.


Sec.  226.86  Site facility diagrams.

    (a) A site facility diagram is required for all permanent 
facilities. A site facility diagram is not required for temporary 
measurement facilities used during well testing operations. No format 
is prescribed for site facility diagrams. The diagram should be 
formatted to fit on an 8\1/2\ x 11-inch sheet of paper, if possible, 
and must be legible and comprehensible to an individual with an 
ordinary working knowledge of oil and gas field operations. If more 
than one page is required, each page must be numbered using the format 
``N of X pages.'' The diagram does not need to be to scale. Sample site 
facility diagrams are available at https://www.bia.gov/regional-offices/eastern-oklahoma/osage-agency.
    (b) The site facility diagram must:
    (1) Clearly identify the name of the lessee, lease(s) the diagram 
applies to, and facility location. Facility location must include both 
GPS coordinates and the legal description;
    (2) Reflect the position of the production and water recovery 
equipment, piping for oil, gas, and water, and metering or other 
measuring systems in relation to each other;
    (3) Commencing with the header, identify all equipment including, 
but not limited to, the header, wellhead, piping, tanks, metering 
systems located on the site, appropriate valves, and any other 
equipment used in the handling, conditioning, or disposal of production 
and water, and must indicate the direction or flow;
    (4) Identify the wells flowing into headers by US Well Number;
    (5) Indicate which valve(s) must be sealed and in what position 
during the production phase, sales phase, and during other production 
activities (e.g., circulating tanks or drawing off water), which may be 
shown by an attachment, if necessary;
    (6) Clearly identify all meters and measurement equipment on the 
diagram or in an attachment to the diagram; and
    (7) Clearly identify the FMP(s) for each measurement facility where 
the measurement affects calculation of the volume or quality of oil and 
gas production upon which royalty is owed. Where production from more 
than one well will flow into the FMP(s), the lessee must list all US 
Well Numbers associated with each FMP.
    (c) For new, permanent facilities that become operational after 
[effective date of final rule], a site facility diagram must be filed 
within 60 calendar days after the facilities become operational.
    (d) For facilities that are in service on or before [effective date 
of final rule], a site facility diagram identifying FMPs, as required 
by paragraph (b)(7) of this section, must be filed by [120 days after 
effective date of final rule] or such longer period as the 
Superintendent may authorize.
    (e) After a site facility diagram is submitted pursuant to this 
section, the lessee has an ongoing obligation to amend the diagram 
within 60 calendar days after any facilities are modified.


Sec.  226.87  Assignment of facility measurement point (FMP) numbers.

    The BIA will assign a unique FMP number to each oil and gas FMP 
identified on the site facility diagram submitted under Sec.  226.85.
    (a) For a new facility in service after [effective date of final 
rule], the lessee must start using FMP numbers for reporting to ONRR 
the first production month after the BIA assigns the FMP numbers and 
every month thereafter.
    (b) For an existing facility in service on or before [effective 
date of final rule], the lessee must start using FMP numbers for 
reporting to ONRR the third production month after the BIA assigns the 
FMP numbers and every month thereafter.


Sec.  226.88  Requirements for production records.

    (a) Lessees, purchasers, transporters, and other persons involved 
in producing, transporting, purchasing, selling, or measuring oil and 
gas through the point of royalty measurement or point of first sale, 
whichever is later, must retain all records, including source records, 
relevant to determining the quality, quantity, disposition, and 
verification of production attributable to the subject lease. This 
applies to all records generated during, or for, the period the lessee 
has an interest in, or conducts

[[Page 2474]]

operations on, the lease or the period in which a purchaser, 
transporter, or other persons are involved in transporting, purchasing, 
or selling production therefrom.
    (b) Records that are created after [effective date of final rule] 
must be legible and include the following:
    (1) The FMP, lease, or unit number;
    (2) A unique equipment identifier (e.g., a unique tank or meter 
station number);
    (3) The name of the person who created the record; and
    (4) The signor's printed name, for any records requiring a 
signature.
    (c) Records under this section must be maintained and preserved for 
a minimum of six years from the date upon which the relevant 
transaction was recorded unless the Superintendent or ONRR provides 
written notice to the lessee that an audit or investigation is being 
conducted and the records must be maintained for a longer period. If an 
audit or investigation of the records is being conducted, the lessee 
must maintain the records until the Superintendent or ONRR issues a 
written release of such obligation.
    (d) Records under this section must be made available to the 
Superintendent or ONRR for inspection upon request. A reasonable period 
of time will be provided to produce historical records.


Sec.  226.89  Easements for access to wells located off-lease.

    (a) The Superintendent may grant commercial and non-commercial SWD 
easements for access to existing wells located off-lease on trust or 
restricted Indian lands in accordance with the regulations in part 169 
of this title.
    (b) The grantee must post a performance bond for all SWD easements 
in accordance with the requirements in subpart G.
    (c) The lessee is responsible for all surface damages resulting 
from use of the easement and must settle such damages as provided in 
Sec.  226.83.

Waste Prevention


Sec.  226.90  Prevention of waste.

    (a) A lessee must conduct all operations in a manner that prevents 
the waste of oil and gas and must not use oil and gas in a wasteful 
manner.
    (b) The Superintendent has authority to impose requirements deemed 
necessary to prevent the waste of oil and gas and promote the maximum 
ultimate economic recovery thereof, consistent with conservation of the 
resources.
    (c) For purposes of this section, waste includes, but is not 
limited to, inefficient, excessive, or improper use or dissipation of 
reservoir energy resulting in a reasonable reduction in the quality of 
oil and gas that may be produced or the unnecessary or excessive 
surface loss or destruction of oil and gas without beneficial use.


Sec.  226.91  Royalty on lost or wasted production.

    (a) Royalty is due on all oil and gas avoidably lost or wasted. The 
Superintendent and ONRR will determine the volume and quality of lost 
or wasted production. Royalty is not due on oil and gas that is 
unavoidably lost.
    (b) The following qualify as avoidably lost production:
    (1) Gas that is vented or flared without the Superintendent's prior 
approval; and
    (2) Produced oil or gas that the Superintendent determines was lost 
because of the lessee's:
    (i) Negligence;
    (ii) Failure to take all reasonable measures to prevent or control 
the loss; or
    (iii) Failure to comply with applicable lease and permit terms and 
conditions, the regulations in this part, or applicable orders and 
notices.
    (c) The following qualify as unavoidably lost production:
    (1) Oil or gas that is lost because of line failures, equipment 
malfunctions, blowouts, fires, or other similar circumstances, except 
where the Superintendent determines that the loss was avoidable 
pursuant to paragraph (b)(2) of this section;
    (2) Oil or gas that is lost during the following operations, and 
from the following sources, except where the Superintendent determines 
that the loss was avoidable pursuant to paragraph (b)(2) of this 
section:
    (i) Well drilling;
    (ii) Well completion and related operations;
    (iii)Initial production tests, subject to the limitations in Sec.  
226.156(a);
    (iv) Subsequent well tests, subject to the limitations in Sec.  
226.156(b);
    (v) Exploratory coalbed methane well dewatering;
    (vi) Normal gas vapor losses from a storage tank or other low-
pressure vessel, unless the Superintendent determines that recovery of 
the gas vapors is warranted;
    (vii) Well venting during downhole well maintenance or liquids 
unloading, performed in compliance with Sec.  226.156(c);
    (viii) Facility and pipeline maintenance, such as when the lessee 
must blow-down and depressurize equipment to perform maintenance or 
repairs; and
    (ix) Emergencies, subject to the limitations in Sec.  226.156(d).
    (3) Produced gas that is vented or flared with the Superintendent's 
approval.

Drainage Obligations


Sec.  226.92  Prevention of drainage.

    (a) Where any lease is being drained of oil and gas by wells on an 
adjacent lease issued at a lower royalty rate, the Superintendent may 
require the lessee being drained to:
    (1) Drill or modify and produce all wells necessary to protect the 
lease from drainage;
    (2) Enter into a cooperative agreement with the lease upon which 
the draining well is located; or
    (3) Pay compensatory royalties for drainage that has occurred and 
continues to occur.
    (b) The Superintendent may, in their discretion, approve 
alternative, equivalent protective measures outside of those set forth 
in paragraph (a) of this section.
    (c) The lessee must take protective action within a reasonable time 
after they first knew, or had constructive notice, that drainage may be 
occurring. For purposes of this section, a lessee is considered to have 
constructive notice of drainage if they operate or own any interest in 
the draining lease or well.
    (d) If the Superintendent has reason to believe that drainage is 
occurring, they will notify the lessee in writing. Such notification 
does not alleviate the lessee's responsibility to take protective 
action when they first knew, or had constructive notice, that drainage 
may be occurring, which date may precede the receipt of notice from the 
Superintendent.
    (e) The Superintendent will determine whether a lessee took 
protective action within a reasonable time on a case-by-case basis 
taking into consideration the time required to evaluate the 
characteristics and performance of the draining well; rig availability; 
well depth; the need for environmental analysis; weather conditions; 
and other relevant factors.
    (f) The lessee is not required to take any of the protective 
actions listed in paragraph (a) of this section if they can prove, to 
the Superintendent's satisfaction, that when they first knew, or had 
constructive notice, of drainage, a sufficient quantity of oil or gas 
could not be produced from a protective well for a reasonable profit 
above the cost of drilling, completing, and operating the protective 
well.

[[Page 2475]]

Sec.  226.93  Compensatory royalty for drainage.

    (a) If the Superintendent determines that a lessee was required to 
take protective action to prevent drainage under Sec.  226.92 and 
failed to take such action within a reasonable time, the lessee must 
pay compensatory royalty for the period of the delay.
    (b) The Superintendent will assess compensatory royalty beginning 
on the first calendar day of the month following the earliest 
reasonable time the lessee should have taken protective action and 
continuing until:
    (1) The lessee drills adequate economic protective wells, and such 
wells remain in continuous production;
    (2) The Superintendent approves a cooperative agreement that covers 
the mineral resources being drained or alternative protective measures;
    (3) The draining well stops producing; or
    (4) The lessee relinquishes their interest in the lease through an 
assignment.
    (c) If a lessee assigns their interest in a lease, they are not 
liable for drainage that occurs after the effective date of the 
assignment.
    (d) An assignee is liable for all drainage obligations that accrue 
after the effective date of the assignment.

Site Security


Sec.  226.94  Storage and sales facilities--seals.

    (a) All lines entering or leaving any oil storage tank must have 
valves capable of being effectively sealed during the production and 
sales phases unless otherwise provided by the regulations in this part. 
Existing valves may be modified so that they are capable of being 
effectively sealed. Appropriate valves must be in an operable condition 
and accurately reflect whether the valve is open or closed.
    (1) During the production phase, all appropriate valves that allow 
unmeasured production to be removed from storage must be effectively 
sealed in the closed position. During any other phase (e.g., sales, 
water draining, hot oiling), and prior to taking the top tank gauge 
measurement, all appropriate vales that allow unmeasured production to 
enter or leave the sales tank must be effectively sealed in the closed 
position.
    (2) Each unsealed or ineffectively sealed valve is a separate 
violation.
    (b) Valves, or combinations of valves and tanks, that provide 
access to production before it is measured for sale are considered 
appropriate valves and are subject to the seal requirements in this 
part. If there is more than one valve on a line from a tank, the valve 
closest to the tank must be sealed.
    (c) All appropriate valves must be in operable condition and 
accurately reflect whether the valve is open or closed.
    (d) The following are not considered appropriate valves and, 
therefore, are not subject to the seal requirements in this part:
    (1) Valves on production equipment (e.g., dehydrator, gun barrel, 
or wash tank);
    (2) Valves on water tanks, provided that the possibility of access 
to production in the sales and storage tanks does not exist through a 
common circulating drain, overflow, or equalizer system;
    (3) Valves on tanks that contain what the Superintendent determines 
to be slop or waste oil;
    (4) Sample cock valves used on piping or tanks with a Nominal Pipe 
Size of one inch or less in diameter;
    (5) Fill-line valves during shipment when a single tank with a 
nominal capacity of 500 bbl or less is used for collecting marginal 
production of oil produced from a single well (i.e., production that is 
less than three bbl per day). All other seal requirements apply;
    (6) Gas line valves used on piping with a Nominal Pipe Size of one 
inch or less used as tank bottom ``roll'' lines, provided that there is 
no access to the contents of the storage tank and the roll lines cannot 
be used as equalizer lines;
    (7) Valves on tank heating systems that use a fluid other than the 
contents of the storage tank (i.e., steam, water, glycol);
    (8) Valves used on piping with a Nominal Pipe Size of one inch or 
less, connected directly to the pump body or used on pump bleed off 
lines;
    (9) Tank vent-line valves; and
    (10) Sales, equalizer, or fill-line valves on systems where 
production may be removed only through approved oil metering systems 
(e.g., LACT or CMS). Any valve that allows access for removal of oil 
before it is measured through the metering system must be effectively 
sealed.
    (e) Tampering with any appropriate valve is prohibited.


Sec.  226.95  Oil measurement system components--seals.

    (a) Components used for determining the quality or quantity of oil 
must be effectively sealed to indicate tampering. Such components 
include, but are not limited to, the following components of LACT 
meters and CMSs:
    (1) The sampler volume control;
    (2) All valves on lines entering or leaving the sample container, 
excluding the safety pop-off valve, if so equipped. Each valve must be 
sealed in the open or closed position, as appropriate;
    (3) The mechanical counter head (totalizer) and meter head;
    (4) The stand-alone temperature averager monitor;
    (5) The non-automatic adjusting, fixed back-pressure valve pressure 
adjustment downstream of the meter;
    (6) Any drain valves larger than one inch in nominal diameter; and
    (7) The right-angle drive.
    (b) Each missing or ineffectively sealed component is a separate 
violation.


Sec.  226.96  Removing production from tanks for sale and 
transportation by truck.

    (a) When a single truckload constitutes a completed sale, the 
driver must possess the documentation required in Sec.  226.114.
    (b) When multiple trucks are involved in a sale and the oil 
measurement method is based on the difference between the opening and 
closing gauges, the driver of the last truck must possess the 
documentation required in Sec.  226.114. All other drivers involved in 
the sale must possess a trip log or manifest.
    (c) After the seals have been broken, the purchaser or transporter 
is responsible for the entire contents of the tank until it is 
resealed. When a single truck is involved in a sale with multiple 
truckloads, the purchaser or transporter must seal the tank in between 
each individual truckload.


Sec.  226.97  Documentation required for transportation of oil and gas.

    (a) Any person engaged in transporting by motor vehicle any oil 
produced from or allocated to any lease, must carry on their person, in 
their vehicle, or have in their immediate control, documentation 
showing the amount, origin, and intended first purchaser of the oil.
    (b) Any person engaged in transporting any oil or gas produced from 
or allocated to any lease by pipeline, must maintain documentation 
showing the amount, origin, and intended first purchaser of the oil or 
gas.
    (c) Any properly identified authorized representative of the 
Superintendent may stop and inspect any motor vehicle on a lease if 
they have probable cause to believe the vehicle is carrying oil 
produced from or allocated to the lease, to determine whether the 
driver possesses proper documentation for the load of oil.
    (d) Any appropriate law enforcement officer or properly identified 
authorized representative of the Superintendent

[[Page 2476]]

accompanied by an appropriate law enforcement officer, may stop and 
inspect any motor vehicle that is off lease, if there is probable cause 
to believe the vehicle is carrying oil produced from or allocated to a 
lease, to determine whether the driver possesses proper documentation 
for the load of oil.


Sec.  226.98  Water draining operations.

    When water is drained from a production storage tank, the lessee, 
purchaser, or transporter must document the following information:
    (a) The lease number;
    (b) The tank location using both GPS coordinates and legal 
description;
    (c) The unique tank number and nominal capacity;
    (d) The date of the opening gauge;
    (e) The opening gauge (gauged manually or automatically), TOV, and 
free water measurements, all to the nearest \1/2\ inch;
    (f) The unique identifying number of each seal removed;
    (g) The closing gauge (gauged manually or automatically) and TOV 
measurement to the nearest \1/2\ inch; and
    (h) The unique identifying number of each seal installed.


Sec.  226.99  Hot oiling, clean-up, and completion operations.

    (a) During hot oil, clean-up, completion operations, or any other 
situation where the lessee removes oil from storage, temporarily uses 
it for operational purposes, and then returns it to storage, they must 
document the following information:
    (1) The lease number;
    (2) The tank location using both GPS coordinates and legal 
description;
    (3) The unique tank number and nominal capacity;
    (4) The date of the opening gauge;
    (5) The opening gauge measurement (gauged manually or 
automatically) to the nearest \1/2\ inch;
    (6) The unique identifying number of each seal removed;
    (7) The closing gauge measurement (gauged manually or 
automatically) to the nearest \1/2\ inch;
    (8) The unique identifying number of each seal installed;
    (9) How the oil was used; and
    (10) Where the oil was used (e.g., well or facility name and 
number).
    (b) During hot oiling, line flushing, or completion operations of 
any other kind where the lessee removes production from storage for use 
on a different lease, the production is considered sold and must be 
measured in accordance with the requirements in the regulations in this 
part and reported to ONRR for the period covering the production in 
question.


Sec.  226.100  Seal records.

    For each seal, the lessee must maintain a record that includes the:
    (a) Unique identifying number of each seal and the valve or meter 
component on which the seal is, or was, used;
    (b) Date of installation or removal of each seal;
    (c) Position in which the valve was sealed (e.g., open or closed); 
and
    (d) Reason the seal was removed.


Sec.  226.101  Requirements for off-lease measurement of production.

    (a) The lessee must submit a request, in writing, for off-lease 
measurement of production and obtain the Superintendent's approval 
thereof. The request must include the following information:
    (1) The lessee's name;
    (2) The lease number for which the lessee is requesting off-lease 
measurement;
    (3) The US Well Number(s) and GPS coordinates for each well 
included in the off-lease measurement proposal; and
    (4) The lease number and legal description for the existing or 
proposed off-lease FMP.
    (b) Off-lease measurement of production must occur at an identified 
FMP unless the Superintendent authorizes otherwise.


Sec.  226.102  Report of spills, theft, mishandling of production, 
accidents, or fires.

    (a) Lessees must report the following to the Superintendent and 
surface owner(s) immediately upon discovery, but not later than the 
calendar day following discovery:
    (1) All spills or releases of oil, gas, produced water, toxic 
liquids, deleterious substances, or waste materials;
    (2) Theft of equipment or production;
    (3) Blowouts;
    (4) Fires;
    (5) Mishandling of production; and
    (6) Accidents on the lease that resulted in the loss of production 
or damage to measurement equipment.
    (b) In addition to providing emergency notification by phone or in 
person, the lessee must also send written notice of the incidents 
identified in paragraphs (a)(1) through (4) of this section to surface 
owner(s) by certified mail--return receipt requested.
    (c) The lessee must submit a Spill and Remediation Report for all 
spills and releases, and a written report of all other incidents, to 
the Superintendent within five business days of any incident identified 
in paragraph (a) of this section, together with a proposed contingency 
or remediation plan that describes the procedures being implemented to 
restore resource values and protect life, property, and the 
environment.
    (d) The lessee must exercise due diligence in taking necessary 
measures to control and remove pollutants and extinguish fires.
    (e) Compliance with the requirements set forth in the regulations 
in this part does not relieve the lessee of the obligation to comply 
with all other applicable laws and regulations.

Subpart J--Oil Measurement


Sec.  226.103  General requirements.

    (a) Oil must be measured on the lease or unit area from which it is 
produced unless approval for off-lease measurement of production is 
obtained in accordance with Sec.  226.101.
    (b) All bypasses of meters are prohibited.
    (c) Tampering with any measurement device, component of a 
measurement device, or measurement process is prohibited.
    (d) Violation of the prohibitions set forth in paragraphs (b) and 
(c) of this section will result in assessment of the maximum penalty 
available under Sec.  226.162(c).


Sec.  226.104  Timeframes for compliance.

    (a) All equipment and procedures used to measure the volume of oil 
for royalty purposes after [effective date of final rule] must comply 
with the requirements in this subpart.
    (b) All equipment and procedures used to measure the volume of oil 
for royalty purposes installed or in-use on leases approved prior to 
[effective date of final rule] must comply with the requirements in 
this subpart by [one year from effective date of final rule]. Prior to 
that date, the equipment and procedures used to measure oil for royalty 
purposes must continue to comply with Sec.  226.38, as it appears in 25 
CFR part 226 (April 1, 2017, edition) and any applicable orders or 
notices.


Sec.  226.105  [Reserved]


Sec.  226.106  Specific measurement performance requirements.

    (a) Volume measurement uncertainty levels. (1) The FMP must achieve 
the following volume measurement uncertainty levels, calculated in 
accordance with the statistical methodologies set forth in API 13.3 and 
the quadrature sum method set forth in Subsection 12.3 of API 14.3.1 
(both incorporated by reference, see Sec.  226.0):

[[Page 2477]]



   Table 1 to Paragraph (a)(1)--Volume Measurement Uncertainty Levels
------------------------------------------------------------------------
                                         The overall volume measurement
  If the averaging period volume is:        uncertainty level must be
                                                     within:
------------------------------------------------------------------------
1. Greater than or equal to 30,000 bbl/ +/-0.50 percent.
 month.
2. Less than 30,000 bbl/month.........  +/-1.50 percent.
------------------------------------------------------------------------

    (2) The Superintendent may grant an exception to the uncertainty 
levels in paragraph (a) of this section only upon the lessee's showing 
that meeting the required uncertainty level would involve extraordinary 
cost or unacceptable adverse environmental effects.
    (b) Bias. The measurement equipment used for volume determinations 
must achieve measurement without statistically significant bias.
    (c) Verifiability. All FMP equipment must be susceptible to the 
BIA's independent verification of the accuracy and validity of all 
inputs, factors, and equations used to determine quality or quantity. 
Verifiability includes the ability to independently recalculate the 
volume and quality of oil based on source records.


Sec.  226.107  Tank gauging--general requirements.

    (a) Oil measurement by tank gauging must be performed using the 
procedures set forth in Sec.  226.108 and accurately compute the total 
net standard volume of oil withdrawn from a properly calibrated sales 
tank.
    (b) Each tank used for oil storage must comply with the recommended 
practices in Subsection 4 of API RP 12R1 (incorporated by reference, 
see Sec.  226.0) and must be connected, maintained, and operated in 
compliance with Sec. Sec.  226.94, 226.98, and 226.99.
    (c) All oil storage tanks must be clearly identified and have a 
unique number the lessee generated stenciled on the tank and maintained 
in a legible condition.
    (d) Each oil storage tank that has a tank gauging system and is 
associated with an FMP must be set and maintained on a level plane.
    (e) Each oil storage tank that has a tank gauging system and is 
associated with an FMP must be gauged using a gauging reference point 
located at 180 degrees (6:00 o'clock) when the individual performing 
the gauging is facing the tank hatch unless the Superintendent approves 
an alternative method.
    (f) The lessee must accurately calibrate each oil storage tank that 
has a tank gauging system and is associated with an FMP using either 
API 2.2A, API 2.2B, or API 2.2C and API RP 2556 (all incorporated by 
reference, see Sec.  226.0) and:
    (1) Determine sales tank capacities by tank calibration using 
actual tank measurements, with unit volume in bbl and incremental 
height measurements that match the gauging increment specified in Sec.  
226.108(b)(5)(i)(d);
    (2) Recalibrate the sales tank if there is a change in purchaser, 
the tank is relocated or repaired, or the capacity of the tank changes 
due to denting, damage, installation, removal of interior components, 
or other alterations; and
    (3) Submit sales tank tables to the Superintendent within 45 
calendar days after calibration or recalculation of the tables.


Sec.  226.108  Tank gauging--procedures.

    (a) The lessee may use manual or automatic tank gauging to 
determine the quality and quantity of oil measured under field 
conditions at an FMP. The Superintendent's prior approval is required 
for all automatic tank gauging. Requests for authorization to use 
automatic tank gauging must be submitted to the Superintendent in 
writing and include the make and model of the automatic tank gauge 
(ATG) the lessee proposes to use.
    (b) The lessee must comply with the following procedures to 
determine the quality and quantity of oil measured:
    (1) Isolate tank. Isolate the tank for at least 30 minutes to allow 
the contents to settle before conducting tank gauging operations. Tank 
isolating valves must be closed and sealed in accordance with Sec.  
226.94.
    (2) Determine opening oil temperature. Determine the temperature of 
oil contained in the sales tank in accordance with API 7.1 or API 7.2 
(both incorporated by reference, see Sec.  226.0) and the following 
requirements:
    (i) A single temperature measurement at the middle of the liquid 
may be used for tanks with less than 5,000 bbls nominal capacity;
    (ii) Glass thermometers must be clean, free of fluid separation, 
and have a minimum graduation of 1.0 [deg]F and an accuracy of +/-0.5 
[deg]F; and
    (iii) Electronic thermometers must have a minimum graduation of 1.0 
[deg]F and an accuracy of +/-0.5 [deg]F.
    (3) Take oil samples. The lessee must conduct sampling operations 
prior to taking the opening gauge unless automatic sampling methods are 
used. Sampling of oil removed from an FMP tank must yield a 
representative sample of the oil and its physical properties and comply 
with the requirements in API 8.1 (incorporated by reference, see Sec.  
226.0).
    (4) Determine observed oil gravity. The lessee must conduct tests 
for oil gravity in accordance with API 9.1, API 9.2, or API 9.3 (all 
incorporated by reference, see Sec.  226.0) and the following 
requirements:
    (i) The hydrometer or thermohydrometer must be clean with a clear, 
legible oil gravity scale and no loose shot weights and must be 
calibrated for an oil gravity range that includes the observed gravity 
of the oil sample being tested;
    (ii) The lessee must allow the temperature to stabilize for a 
minimum of five minutes prior to reading the hydrometer or 
thermohydrometer; and
    (iii) The lessee must read and record the observed API oil gravity 
to the nearest 0.1 degree and the temperature to the nearest 1.0 
[deg]F.
    (5) Measure opening tank fluid level. The lessee must take and 
record the opening gauge only after samples have been taken.
    (i) The lessee must conduct manual gauging in accordance with API 
3.1A and API 18.1 (both incorporated by reference, see Sec.  226.0) 
subject to the following exceptions, additions, and clarifications:
    (A) The proper innage-gauging bob for the measurement method must 
be used;
    (B) A gauging tape must be used. The tape must be made of steel or 
corrosion-resistant material with graduation clearly legible and must 
not be kinked or spliced;
    (C) A suitable product-indicating paste must be used on the gauging 
tape to facilitate the reading. The use of chalk or talcum powder is 
prohibited; and
    (D) The lessee must obtain two consecutive gauging measurements 
that are within \1/4\ inch of each other for any tank regardless of 
size.
    (ii) The lessee must conduct automatic tank gauging in accordance 
with API 3.1B, and API 3.6 (both incorporated by reference, see Sec.  
226.0) and the following requirements:
    (A) The ATG must be inspected, and its accuracy verified to within 
+/-\1/4\ inch, in accordance with the procedures in Subsection 9 of API 
3.1B (incorporated by reference, see Sec.  226.0) prior to sales and 
upon the Superintendent's request. If the ATG is found to be out of the 
manufacturer's tolerance, the lessee will be required to calibrate the 
ATG prior to sales; and
    (B) The lessee must make a detailed log of ATG field verifications 
available to the Superintendent upon request.

[[Page 2478]]

    (6) Determine S&W content. Determine the S&W content of the oil in 
the sales tanks in accordance with API 10.4 (incorporated by reference, 
see Sec.  226.0) using the oil samples obtained pursuant to paragraph 
(d) of this section.
    (7) Transfer oil. Break the tank load valve seal and transfer the 
oil to the tanker truck. After the transfer is complete, close and seal 
the tank valve in accordance with Sec. Sec.  226.94 and 226.96.
    (8) Determine closing oil temperature. Determine the closing oil 
temperature using the procedures set forth in paragraph (b)(2) of this 
section.
    (9) Take closing tank gauge. Take the closing tank gauge using the 
procedures set forth in paragraph (b)(5) of this section.
    (10) Complete run ticket. Complete the run ticket in accordance 
with Sec.  226.114.


Sec.  226.109  LACT system--general requirements.

    (a) LACT systems must meet the construction and operation 
requirements and minimum standards set forth in this section and 
Sec. Sec.  226.103 and 226.110.
    (b) LACT systems must be proven as set forth in Sec.  226.113.
    (c) Run tickets must be completed as set forth in Sec.  226.114.
    (d) All components of LACT systems must be accessible for 
inspection.
    (e) The lessee must notify the Superintendent, in writing, of any 
LACT system failure or equipment malfunction that may have resulted in 
measurement error within 15 calendar days of discovering the failure.
    (f) Any tests conducted on oil samples extracted from LACT system 
samplers for determination of S&W content and observed oil gravity must 
meet the requirements and minimum standards set forth in Sec.  
226.108(b)(2), (4), and (6).
    (g) The average temperature for the run ticket must be calculated 
for the measurement period covered by the run ticket and must be the 
temperature used to calculate the CTL correction factor using API 11.1 
(incorporated by reference, see Sec.  226.0).


Sec.  226.110  LACT system--components and operating requirements.

    (a) Each LACT system must include all equipment listed in API 6.1 
(incorporated by reference, see Sec.  226.0), subject to the following 
exceptions:
    (1) The LACT meter must be a positive displacement or Coriolis 
meter;
    (2) An electronic temperature averaging device must be installed; 
and
    (3) Meter back-pressure must be applied by a back-pressure valve or 
other controllable means of applying back-pressure. Back-pressure may 
be maintained by an automatic-adjusting back-pressure control to adjust 
for changing flow conditions. Back-pressure control must maintain a 
pressure that is above the bubble point of the liquid to prevent the 
formation of vapor, ensuring single-phase flow.
    (b) All LACT system components must be operated in accordance with 
API 6.1 (incorporated by reference, see Sec.  226.0) and the following 
requirements:
    (1) Sampling and mixing must be conducted in accordance with API 
8.2 and API 8.3 (both incorporated by reference, see Sec.  226.0), and 
the sample exactor probe must be inserted in the center half of the 
flowing stream, horizontally oriented, and have external markings that 
show the orientation of the probe in relation to the direction of flow.
    (2) All tests conducted on oil samples extracted from LACT system 
samplers for determination of oil gravity must be conducted in 
accordance with API 9.1, API 9.2, or API 9.3 (all incorporated by 
reference, see Sec.  226.0). All tests for the determination of S&W 
content must be conducted in accordance with API 10.4 (incorporated by 
reference, see Sec.  226.0).
    (3) The composite sample container must be emptied and cleaned upon 
completion of the sample withdrawal.
    (4) The positive displacement or Coriolis meter must be equipped 
with a non-resettable totalizer. The non-resettable totalizer display 
may reside in an electronic flow computer. The meter must include or 
allow for the attachment of a device that generates at least 8,400 
pulses per bbl of registered volume.
    (5) The pressure-indicating device must be located downstream of 
the meter, but upstream of the first valve of the prover connections. 
The pressure-indicating device must be capable of providing pressure 
data to calculate the CPL correction factor.
    (6) The electronic temperature averaging device may be a stand-
alone device or a function of a flow computer and must be installed, 
operated, and maintained as follows:
    (i) The temperature thermowell and transducer must be installed as 
set forth in Subsections 6.3 and 7.2 of API 7.4 (incorporated by 
reference, see Sec.  226.0);
    (ii) The electronic temperature averaging device must be volume-
weighted and take a temperature reading as set forth in Subsection 
9.2.8 of API 21.2 (incorporated by reference, see Sec.  226.0);
    (iii) The average temperature for the run ticket must be calculated 
using the volumetric averaging method set forth in Subsection 9.2.13.2a 
of API 21.2 (incorporated by reference, see Sec.  226.0);
    (iv) The temperature averaging device must have a reference 
accuracy of +/-0.5 [deg]F or better and a minimum graduation of 0.1 
[deg]F.
    (v) The temperature averaging device must include a display of the 
instantaneous temperature and average temperature calculated since the 
run ticket was opened. The display may be a function of an electronic 
flow computer; and
    (vi) The average temperature calculated since the run ticket was 
opened must be used to calculate the CTL correction factor.
    (7) The net standard volume must be calculated at the close of each 
run ticket in accordance with the guidelines set forth in API 11.1 and 
API 12.2.2 (both incorporated by reference, see Sec.  226.0).


Sec.  226.111  Coriolis measurement systems (CMS)--general requirements 
and components.

    This section applies to Coriolis measurement applications that are 
independent of LACT systems.
    (a) A CMS must meet the requirements and minimum standards set 
forth in this section and Sec. Sec.  226.106 and 226.112.
    (b) A CMS must be proven as set forth in Sec.  226.113.
    (c) Run tickets must be completed as set forth in Sec.  226.114.
    (d) A CMS at an FMP must be installed with the components listed in 
API 5.6 (incorporated by reference, see Sec.  226.0) and in accordance 
with the following requirements:
    (1) The pressure transducer must meet the requirements set forth in 
Sec.  226.110(b)(5);
    (2) The temperature determination must meet the requirements set 
forth in Sec.  226.110(b)(6);
    (3) The sampling system must meet the requirements set forth in 
Sec.  226.110(b)(1) through (3) if nonzero S&W content is to be used in 
determining net oil volume. If no sampling system is used, or the 
sampling system does not meet the requirements in Sec.  226.110(b)(1) 
through (3), the S&W content must be reported as zero.
    (4) Sufficient back-pressure must be applied to ensure single-phase 
flow through the meter.
    (e) The API oil gravity reported for the run ticket period must be:
    (1) Determined from a composite sample taken in accordance with 
Sec.  226.110(b)(1) through (3); or
    (2) Calculated from the average density as measured by the CMS over 
the run ticket period in accordance with

[[Page 2479]]

Subsection 9.2.13.2a of API 21.2 (incorporated by reference, see Sec.  
226.0). Density must be corrected to base temperature and pressure in 
accordance with API 11.1 (incorporated by reference, see Sec.  226.0).


Sec.  226.112  Coriolis meter--operating requirements.

    (a) Minimum electronic pulse level. The Coriolis meter must 
register the volume of oil passing through the meter as determined by a 
system that constantly emits electronic pulse signals representing the 
indicated volume measured. The pulse per unit volume must be set at a 
minimum of 8,400 pulses per bbl.
    (b) Meter specifications. The Coriolis meter specifications must 
identify the make and model of the meter they apply to and include the 
following:
    (1) The reference accuracy for both mass flow rate and density, 
stated in percent of reading, percent of full scale, or units of 
measure;
    (2) The effect of changes in temperature and pressure on both mass 
flow and fluid density readings, and the effect of flow rate on density 
readings, stated in percent of reading, percent of full scale, or units 
of measure over a stated amount of change in temperature, pressure, or 
flow rate (e.g., +/-0.1 percent of reading per 20 psi);
    (3) The stability of the zero reading for volumetric flow rate, 
stated in percent of reading, percent of full scale, or units of 
measure;
    (4) The design limits for flow rate and pressure; and
    (5) The pressure drop through the meter as a function of flow rate 
and fluid viscosity.
    (c) Submission of meter specifications. The lessee must submit 
Coriolis meter specifications to the Superintendent upon request.
    (d) Non-resettable totalizer. The Coriolis meter must have a non-
resettable internal totalizer for indicated volume.
    (e) Verification of meter zero-value using the manufacturer's 
specifications. If the indicated flow rate is within the manufacturer's 
specifications for zero stability, no adjustments are required. If the 
indicated flow rate is outside such specifications, the meter's zero 
reading must be adjusted. After the meter's zero has been adjusted, the 
meter must be proven as set forth in Sec.  226.113. A copy of the zero-
value verification procedure must be provided to the Superintendent 
upon request.
    (f) Required on-site information.
    (1) The Coriolis meter display must be readable without using data 
collection units, laptop computers, or any special equipment and must 
be on-site and accessible to the Superintendent.
    (2) The following values and corresponding units of measurement 
must be displayed for each Coriolis meter:
    (i) The instantaneous display of liquid density (pounds/bbl, 
pounds/gal, or degrees API);
    (ii) The instantaneous indicated volumetric flow rate through the 
meter (bbl/day);
    (iii) The meter factor;
    (iv) The instantaneous pressure (psi);
    (v) The instantaneous temperature ([deg]F);
    (vi) The cumulative gross standard volume through the meter (non-
resettable totalizer) (bbl); and
    (vii) The previous day's gross standard volume through the meter 
(bbl).
    (3) The following information must be correct, maintained in 
legible condition, and accessible to the Superintendent at the FMP 
without the use of data collection equipment, laptop computers, or any 
other special equipment:
    (i) The make, model, and size of each sensor; and
    (ii) The make, model, range, and calibrated span of the pressure 
and temperature transducer used to determine gross standard volume.
    (4) The lessee must maintain a log of all meter factors, zero 
verifications, and zero adjustments. For zero adjustments, the log must 
include the zero value after adjustment. The log must be made available 
to the Superintendent upon request.
    (g) Audit trail requirements. The information identified in 
paragraphs (g)(1) through (4) of this section must be recorded and 
maintained by the lessee for six years from the date it was generated 
unless the Superintendent provides written notice to the lessee that an 
audit or investigation is being conducted and the records must be 
maintained for a longer period. If an audit or investigation of the 
records is being conducted, the lessee must maintain the records until 
the Superintendent issues a written release of such obligation. Audit 
trail requirements must follow Subsection 10 of API 21.2 (incorporated 
by reference, see Sec.  226.0). All data and records must be provided 
to the Superintendent upon request.
    (1) Quantity transaction record (QTR). The QTR must comply with the 
requirements for run tickets set forth in Sec.  226.114.
    (2) Configuration log. The configuration log must comply with the 
requirements set forth in Subsection 10.2 of API 21.2 (incorporated by 
reference, see Sec.  226.0), and identify all constant flow parameters 
used in generating the QTR.
    (3) Event log. The event log must comply with the requirements set 
forth in Subsection 10.6 of API 21.2 (incorporated by reference, see 
Sec.  226.0).
    (4) Alarm log. The alarm log must record the type and duration of 
density deviations from acceptable parameters and instances in which 
the flow rate exceeded the manufacturer's maximum recommended flow rate 
or was below the manufacturer's minimum recommended flow rate.
    (h) Data protection. To ensure that audit trail requirements under 
paragraph (g) of this section are met, each Coriolis meter must have a 
backup power supply installed and maintained in operable condition or a 
non-volatile memory capable of retaining all data in the unit's memory.


Sec.  226.113   Meter proving requirements.

    (a) This section specifies the minimum requirements for conducting 
volumetric meter proving for all FMP meters.
    (b) Meter prover. The only acceptable provers are positive 
displacement master meters, Coriolis master meters, and displacement 
provers. The lessee must ensure that the meter prover used to determine 
the meter factor has a valid certificate of calibration, identifying 
the prover by serial number, on site and available for the 
Superintendent's review. The certificate must show that the prover was 
calibrated as follows:
    (1) Master meters must have a meter factor within 0.9900 to 1.0100 
determined by a minimum of five consecutive prover runs within 0.0005 
(0.05 percent repeatability) as set forth in Subsection 6.5, Table 2 of 
API 4.5 (incorporated by reference, see Sec.  226.0). The master meter 
must not be mechanically compensated for oil gravity or temperature; 
its readout must indicate units of volume without corrections.
    (2) The meter factor must be documented on the calibration 
certificate and must be calibrated at least once every 12 months. New 
master meters must be calibrated immediately and recalibrated three 
months thereafter. Master meters that have undergone mechanical 
repairs, alterations, or changes that affect the calibration must be 
calibrated immediately upon the completion of this work and 
recalibrated three months thereafter in accordance with Annex B of API 
4.8 (incorporated by reference, see Sec.  226.0).
    (3) Displacement provers must meet the requirements set forth in 
API 4.2

[[Page 2480]]

and be calibrated using the water-draw method set forth in API 4.9.2 at 
the calibration frequencies specified in Subsection 10.1(b) of API 4.8 
(all incorporated by reference, see Sec.  226.0).
    (4) The base prover volume of a displacement prover must be 
calculated in accordance with API 12.2.4 (incorporated by reference, 
see Sec.  226.0).
    (5) Displacement provers must be sized to obtain a displacer 
velocity through the prover that is within the appropriate range during 
proving in accordance with Subsections 4.3.4.1 and 4.3.4.2 of API 4.2 
(incorporated by reference, see Sec.  226.0).
    (6) Fluid velocity is calculated using Subsection 4.3.4.3, Equation 
12 of API 4.2 (incorporated by reference, see Sec.  226.0).
    (c) Meter proving runs. Meter proving must comply with the 
applicable section(s) of API 4.1 (incorporated by reference, see Sec.  
226.0) and the following requirements:
    (1) Meter proving must be performed under normal operating 
conditions. The normal operating conditions will be established by the 
flow rate, fluid pressure, fluid temperature, and fluid gravity at the 
time of proving. These established conditions will be in effect until 
the next proving.
    (i) The oil flow rate through the LACT or CMS during proving must 
be within 10 percent of the normal flow rate;
    (ii) The pressure as measured by the LACT or CMS during proving 
must be within 10 percent of the normal flow rate;
    (iii) The temperature as measured by the LACT or CMS during the 
proving must be within 10 [deg]F of the normal operating temperature;
    (iv) The gravity of the oil during proving must be within 5[deg] 
API of the normal oil gravity; and
    (v) If the normal flow rate, pressure, temperature, or oil gravity 
vary by more than the limits defined in paragraphs (c)(1) through (4) 
of this section, meter provings must be conducted at the upper, lower, 
and midpoint limits of normal operating conditions.
    (2) If each proving run is not of sufficient volume to generate at 
least 10,000 pulses from the positive displacement meter or the 
Coriolis meter as specified in Subsection 4.3.2.1 of API 4.2, then 
pulse interpolation must be used in accordance with API 4.6 (both 
incorporated by reference, see Sec.  226.0).
    (3) Proving runs must be made until the calculated meter factor or 
meter-generated pulses from five consecutive runs match within a 
tolerance of 0.0005 (0.05 percent) between the highest and lowest value 
in accordance with Subsection 9 of API 12.2.3 (incorporated by 
reference, see Sec.  226.0).
    (4) The new meter factor is the arithmetic average of the meter-
generated pulses or intermediate meter factors calculated from the five 
consecutive runs in accordance with Subsection 9 of API 12.2.3 
(incorporated by reference, see Sec.  226.0).
    (5) Meter factor computations must follow the sequence set forth in 
Subsection 12 of API 12.2.3 (incorporated by reference, see Sec.  
226.0).
    (6) If multiple meter factors are determined over a range of normal 
operating conditions, then:
    (i) If all the meter factors determined over a range of conditions 
fall within 0.0020 of each other, a single meter factor may be 
calculated for that range as the arithmetic average of all the meter 
factors within that range. The full range of normal operating 
conditions may be divided into segments such that all the meter factors 
within each segment fall within a range of 0.0020. In such case, a 
single meter factor for each segment may be calculated as the 
arithmetic average of the meter factors within that segment; or
    (ii) The metering system may apply a dynamic meter factor derived 
(using linear interpolation, polynomial fit, etc.) from the series of 
meter factors determined over the range of normal operating conditions, 
so long as no two neighboring meter factors differ by more than 0.0020.
    (7) The meter factor must be at least 0.9900 and no more than 
1.0100.
    (8) The initial meter factor for a new or repaired meter must be at 
least 0.9950 and no more than 1.0050.
    (9) For positive displacement meters, the back-pressure valve may 
be adjusted after proving only within the normal operating fluid flow 
rate and fluid pressure as described in paragraph (c)(1) of this 
section. If the back-pressure valve is adjusted after proving, the 
lessee must document the as-left fluid flow rate and fluid pressure on 
the proving report.
    (10) If a composite meter factor is calculated, the CPL value must 
be calculated from the pressure setting of the back-pressure valve or 
the normal operating pressure at the meter. Composite meter factors 
must not be used with a Coriolis meter.
    (d) Minimum proving frequency. The lessee must prove all FMP meters 
every three months (quarterly) or each time the registered volume 
flowing through the meter, as measured on the non-resettable totalizer 
from the last proving, increases by 75,000 bbls, whichever occurs 
first, but not more frequently than monthly.
    (e) Events triggering proving. The lessee must prove all FMP meters 
before the removal or sale of production after any of the following 
events occur:
    (1) Initial meter installation;
    (2) Meter zeroing (Coriolis meter);
    (3) Modification of mounting conditions;
    (4) A change in fluid temperature that exceeds the transducer's 
calibrated span;
    (5) A change in the flow rate, pressure, temperature, or gravity 
that exceeds the normal operating conditions as set forth in paragraph 
(c)(1) of this section;
    (6) The mechanical or electrical components of the meter are 
changed, repaired, or removed;
    (7) Internal calibration factors are changed or reprogrammed; or
    (8) The Superintendent requests proving.
    (f) Excessive meter factor deviation. If the difference between 
meter factors established in two successive provings exceeds +/-0.0025, 
the meter must be immediately removed from service, checked for damage 
or wear, adjusted or repaired, and reproved before being returned to 
service.
    (1) The arithmetic average of the two successive meter factors must 
be applied to the production measured through the meter between the 
date of the previous meter proving and the date of the most recent 
meter proving.
    (2) The proving report must clearly show the most recent meter 
factor and describe all subsequent adjustments or repairs.
    (g) Verification of the temperature transducer. As part of each 
required meter proving and upon replacement, the temperature averager 
for a LACT system and temperature transducer used in conjunction with a 
CMS must be verified against a known standard in accordance with the 
following requirements:
    (1) The temperature averager or temperature transducer must be 
compared with a test thermometer traceable to NIST and having a stated 
accuracy of +/-0.25[deg] or better; and
    (2) The temperature reading displayed on the temperature averager 
or temperature transducer must be compared with the reading of the test 
thermometer using one of the following methods:
    (i) The test thermometer must be placed in a test thermometer well 
located not more than 12 inches from the probe of the temperature 
averager or temperature transducer; or
    (ii) Both the test thermometer and probe of the temperature 
averager or temperature transducer must be placed

[[Page 2481]]

in an insulated water bath. The water bath temperature must be within 
20 [deg]F of the normal flowing temperature of the oil.
    (3) The displayed reading of instantaneous temperature from the 
temperature averager or temperature transducer must be compared with 
the reading from the test thermometer. If the readings differ by more 
than 0.5 [deg]F, the difference must be noted on the meter proving 
report and the temperature average or temperature transducer must be:
    (i) Adjusted to match the reading of the test thermometer; or
    (ii) Recalibrated, repaired, or replaced.
    (h) Verification of the pressure transducer (if applicable). As 
part of each required meter proving and upon replacement, the pressure 
transducer must be compared with a test pressure device (dead weight or 
pressure gauge) traceable to NIST and having a stated maximum 
uncertainty of no more than one-half of the accuracy required from the 
transducer being verified.
    (1) The pressure reading displayed on the pressure transducer must 
be compared with the reading of the test pressure device.
    (2) The pressure transducer must be tested at the following three 
points:
    (i) Zero (atmospheric pressure);
    (ii) 100 percent of the calibrated span of the pressure transducer; 
and
    (iii) A point that represents the normal flowing pressure through 
the Coriolis meter.
    (3) If the pressure applied by the test pressure device and the 
pressure displayed on the pressure transducer vary by more than the 
required accuracy of the pressure transducer, the pressure transducer 
must be adjusted to read within the stated accuracy of the test 
pressure device.
    (i) Density verification (if applicable). If the API gravity of oil 
is determined from the average density measured by the Coriolis meter 
(rather than from a composite sample), then during each proving of the 
Coriolis meter, the instantaneous flowing density determined by the 
Coriolis meter must be verified by comparing it with an independent 
density measurement as set forth in Subsection 9.1.2.1 of API 5.6 
(incorporated by reference, see Sec.  226.0). The difference between 
the indicated density determined from the Coriolis meter and the 
independently determined density must be within the density reference 
accuracy specification of the Coriolis meter. Sampling must be 
performed in accordance with API 8.1, API 8.2, or API 8.3, as 
appropriate, (all incorporated by reference, see Sec.  226.0).
    (j) Reporting requirements for meter proving. The lessee must 
report all meter proving and volume adjustments following any LACT 
system or CMS malfunction, including excessive meter-factor deviation, 
to the Superintendent within 14 calendar days after proving. Meter 
proving reports may use the forms in Subsection 13 of API 12.2.3 or 
Appendix C of API 5.6 (see Sec.  226.0 for availability information) or 
any other format containing the same information as the API forms, 
provided that the calculation of meter factors maintains the proper 
calculation sequence and rounding.
    (k) Edits and adjustments to reported volume. (1) If there are 
measurement errors stemming from an equipment malfunction that results 
in discrepancies to the calculated volume, the lessee must estimate the 
volume reported during the period in which the error occurred.
    (2) All edits made to the data before submission of the report to 
ONRR must be documented and include verifiable justifications of the 
edits made. Such documentation must be made available to the 
Superintendent and ONRR upon request.
    (3) All values on QTRs that have been changed or edited must be 
clearly identified and cross-referenced to the justification required 
in paragraph (k)(2) of this section.
    (4) The volumes reported to ONRR must be corrected beginning with 
the date that the inaccuracy occurred. If the date is unknown, the 
volumes must be corrected beginning with the production month that 
includes the date that is halfway between the date of the previous and 
most recent verifications.


Sec.  226.114  Run tickets.

    (a) Tank gauging. After oil is measured by tank gauging, the 
lessee, purchaser, or transporter, as appropriate, must complete a 
uniquely numbered run ticket containing the following information:
    (1) The lessee's name;
    (2) The lease number;
    (3) The name of the individual that performed the tank gauging;
    (4) The unique tank number and nominal tank capacity;
    (5) The opening and closing dates and times;
    (6) The open and closing gauges and observed temperatures in 
[deg]F;
    (7) The observed volume for opening and closing gauge using tank-
specific calibration charts (see Sec.  226.107(f));
    (8) The total net standard volume removed from the tank following 
API 11.1 (incorporated by reference, see Sec.  226.0);
    (9) The observed API oil gravity and temperature in [deg]F;
    (10) The API oil gravity at 60 [deg]F, following API 11.1 
(incorporated by reference, see Sec.  226.0);
    (11) The S&W content percentage; and
    (12) The unique numbering of each seal removed and installed.
    (b) LACT system and CMS. Unless the lessee is using a flow 
computer, at the beginning of every month, before conducting proving 
operations on a LACT system, the lessee, purchaser, or transporter, as 
appropriate, must complete a uniquely numbered run ticket containing 
the following information:
    (1) The lessee's name;
    (2) The name of the purchaser's representative;
    (3) The lease number;
    (4) The unique meter ID number;
    (5) The opening and closing dates and times;
    (6) The opening and closing totalizer readings of the indicated 
volume;
    (7) The meter factor, indicating whether it is a composite meter 
factor;
    (8) The total gross standard volume removed through the LACT system 
or CMS;
    (9) The API oil gravity;
    (i) For API oil gravity determined from a composite sample, the 
observed API oil gravity and temperature must be indicated in [deg]F 
and the API oil gravity must be indicated at 60 [deg]F;
    (ii) For API oil gravity determined from average density (CMS 
only), the CMS must determine the average uncorrected density;
    (10) The average temperature for the measurement period in [deg]F;
    (11) The average flowing pressure for the measurement period in 
psia;
    (12) The S&W content percent; and
    (13) The unique number of each seal removed and installed.
    (c) Any accumulators used in the determination of average pressure, 
average temperature, and average density for the measurement period 
must be reset to zero whenever a new run ticket is opened.
    (d) Run tickets must be submitted to the Superintendent on or 
before the last calendar day of the month following the production 
month.


Sec.  226.115  Oil measurement by alternate methods.

    Any method of oil measurement at an FMP, other than tank gauging, 
LACT system, or CMS, requires the Superintendent's prior approval.


Sec.  226.116  Determination of oil volumes by methods other than 
measurement.

    (a) When production cannot be measured due to a spill or leak, the

[[Page 2482]]

amount of production will be determined using the method the 
Superintendent requires. This category of production includes, but is 
not limited to, oil classified as slop or waste oil.
    (b) No oil may be classified or disposed of as waste oil unless the 
lessee demonstrates to the Superintendent's satisfaction that it is not 
economically feasible to put such oil into marketable condition.
    (c) The lessee must not sell or otherwise dispose of slop oil 
without prior approval from the Superintendent. The sale or disposal of 
slop oil must be reported to ONRR in accordance with the requirements 
set forth in Sec. Sec.  226.45 and 226.87.

Subpart K--Gas Measurement


Sec.  226.117   General requirements.

    (a) Gas must be measured on the lease or cooperative agreement unit 
area from which it is produced unless approval for off-lease 
measurement is obtained pursuant to Sec.  226.101.
    (b) All bypasses of meters are prohibited.
    (c) Tampering with any measurement device, component of a 
measurement device, or measurement process is prohibited. Violation of 
this prohibition will result in the assessment of the maximum penalty 
available under Sec.  226.162(c).


Sec.  226.118   Timeframes for compliance.

    (a) All equipment and procedures used to measure the volume of gas 
for royalty purposes after [effective date of final rule] must comply 
with the requirements in this subpart.
    (b) All equipment and procedures used to measure the volume of gas 
for royalty purposes in use on [effective date of final rule] must 
comply with the requirements in this subpart by [one year from 
effective date of final rule]. Prior to that date, the equipment and 
procedures used to measure gas for royalty purposes must continue to 
comply with Sec.  226.39, as it appears in 25 CFR part 226 (April 1, 
2017, edition) and any applicable orders or notices.


Sec.  226.119   [Reserved]


Sec.  226.120   Specific performance requirements.

    (a) Flow rate measurement uncertainty levels. (1) For high-volume 
FMPs, the measuring equipment must achieve an overall flow rate 
measurement uncertainty within +/- 3 percent.
    (2) For very-high-volume FMPs, the measuring equipment must achieve 
an overall flow rate measurement uncertainty within +/- 2 percent.
    (3) There are no measurement uncertainty requirements for low- and 
very-low-volume FMPs.
    (4) The measurement uncertainty is based on the values of flowing 
parameters (e.g., differential pressure, static pressure, and flowing 
temperature for differential meters or velocity, mass flow rate, and 
volumetric flow rate for linear meters) determined as follows, listed 
in order of priority:
    (i) The average flowing parameters listed on the most recent daily 
QTR, if available to the Superintendent at the time of the uncertainty 
determination; or
    (ii) The average flowing parameters from the previous day, as 
required under Sec.  226.125(d)(4)(i) through (iii) (for differential 
meters).
    (5) The uncertainty must be calculated in accordance with Section 
12 of API 14.3.1 (incorporated by reference, see Sec.  226.0) or other 
methods the Superintendent approves.
    (b) Heating value uncertainty levels. (1) For high-volume FMPs, the 
measuring equipment must achieve an annual average heating value 
uncertainty within +/- 3 percent.
    (2) For very-high-volume FMPs, the measuring equipment must achieve 
an annual average heating value uncertainty within +/- 2 percent.
    (3) There are no heating value uncertainty requirements for low- 
and very-low-volume FMPs.
    (4) Unless otherwise approved by the Superintendent, the average 
annual heating value uncertainty must be determined as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA23.008


    (c) Bias. For low-, high-, and very-high-volume FMPs, the measuring 
equipment used for either the flow rate or heating value determination 
must achieve measurement without statistically significant bias.
    (d) Verifiability. The lessee must not use measurement equipment 
for which the Superintendent cannot independently verify the accuracy 
and validity of any input, factor, or equation used by the measuring 
equipment to determine quantity, rate, or heating value. Verifiability 
includes the ability to independently recalculate the volume, rate, and 
heating value based on source records and field observations.


Sec.  226.121  Flange-tapped orifice plate (primary devices).

    (a) Exemptions from requirements. The standards and requirements in 
this section apply to all flange-tapped orifice plates subject to the 
following exceptions:
    (1) Low-volume FMPs are exempt from the standards in paragraph (b) 
of this section; and
    (2) Very-low-volume FMPs are exempt from the standards and 
requirements in paragraphs (b), (c), (f) and (l) of this section.

[[Page 2483]]

    (b) Orifice plate specifications. Orifice plates must meet the 
requirements set forth in Section 4 of API 14.3.2 (incorporated by 
reference, see Sec.  226.0) and the:
    (1) Beta ratio must be no less than 0.10 and no greater than 0.75; 
and
    (2) Orifice bore diameter must be no less than 0.45 inches.
    (c) Initial orifice plate inspection. If an FMP measures oil from 
wells first coming into production or existing wells that have been re-
fractured, the lessee must inspect the orifice plate upon installation 
and every two weeks thereafter until the production of particulate 
matter from the wells subsides. If the orifice plate does not comply 
with the requirements set forth in Subsection 4 of API 14.3.2 
(incorporated by reference, see Sec.  226.0), the lessee must replace 
it. Once the orifice plate complies with API 14.3.2, Subsection 4, the 
lessee must conduct inspections as set forth in paragraph (d) of this 
section.
    (d) Routine orifice plate inspection. (1) Lessees must pull and 
inspect the orifice plate as follows:
    (i) Once every 12 months for very-low-volume FMPs;
    (ii) Once every 6 months for low-volume FMPs;
    (iii) Once every 3 months for high-volume FMPs; and
    (iv) Once a month for very-high-volume FMPs.
    (2) If a routine inspection reveals that an orifice plate does not 
comply with Section 4 of API 14.3.2 (incorporated by reference, see 
Sec.  226.0), the lessee must replace it.
    (e) Documentation of orifice plate inspections. The lessee must 
document each orifice plate inspection and include that documentation 
as part of the verification report submitted in accordance with 
Sec. Sec.  226.123 or 226.126. The documentation must include:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) The plate orientation (bevel upstream or downstream);
    (5) The measured orifice bore diameter;
    (6) The plate condition (documenting compliance with Section 4 of 
API 14.3.2 (incorporated by reference, see Sec.  226.0);
    (7) The presence of oil, grease, paraffin, scale, or other 
contaminants on the plate;
    (8) The date and time of inspection; and
    (9) Whether the plate was replaced.
    (f) Meter tube specifications.
    (1) Meter tubes must meet the requirements set forth in Subsections 
5.1 through 5.4 of API 14.3.2 (incorporated by reference, see Sec.  
226.0). If flow conditioners are used, they must be isolating flow 
conditioners or 19-tube bundle flow straighteners constructed in 
compliance with Subsections 5.5.2 through 5.5.4 of API 14.3.2 and 
located in compliance with Subsection 6.3 of API 14.3.2 (all 
incorporated by reference, see Sec.  226.0).
    (2) Meter tube lengths and the location of 19-tube bundle flow 
straighteners, if applicable, must comply with the requirements set 
forth in Subsection 6.3 of API 14.3.2 (incorporated by reference, see 
Sec.  226.0). If the diameter ratio falls between the values set forth 
in Subsection 6.3, Tables 7, 8a, or 8b of API 14.3.2 (incorporated by 
reference, see Sec.  226.0), the length identified for the larger 
diameter ratio in the appropriate table is the minimum requirement for 
meter tube length and determines the location of the end of the 19-tube 
bundle flow straightener that is closest to the orifice plate.
    (g) Basic meter tube inspection. The lessee must perform a basic 
inspection of meter tubes that can identify obstructions, pitting, and 
buildup of foreign substances within the following timeframe:
    (1) Frequency. (i) Once every 10 years for low-volume and very-low-
volume FMPs; and
    (ii) Once every 5 years for high-volume and very-high-volume FMPs.
    (2) Corrective action. If the basic meter tube inspection 
identifies obstructions, pitting, or buildup of foreign substances, the 
lessee must take one of the following corrective actions within 30 
calendar days:
    (i) For all FMPs, if the inspection only identifies the presence of 
an obstruction (such as debris in front of the flow conditioner), the 
lessee must remove the obstruction. If the inspection only identifies 
pitting, no corrective action is required;
    (ii) For low- and very-low volume FMPs, if the inspection 
identifies the buildup of foreign substances, the lessee must clean the 
meter tube of such buildup; and
    (iii) For high- and very-high-volume FMPs, if the inspection 
indicates pitting or the buildup of foreign substances, the lessee must 
clear or repair the meter tube and conduct a detailed meter tube 
inspection under paragraph (h) of this section; or
    (iv) Submit a written request to the Superintendent for an 
extension of the 30-day corrective action timeframe, justifying the 
need for the extension and specifying the length of the extension 
requested.
    (h) Detailed meter tube inspection. If a detailed meter tube 
inspection is required under paragraph (g)(2)(iii) of this section, the 
lessee must measure and inspect the meter tube to determine whether it 
complies with Subsections 5.1 through 5.4 of API 14.3.2 (incorporated 
by reference, see Sec.  226.0). If the meter tube does not comply with 
the required standards, the lessee must repair or replace the meter 
tube and bring into compliance.
    (i) Documentation of meter tube inspections. The lessee must 
document all inspections and make such documentation available to the 
Superintendent upon request. The documentation must include:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) The date and time of the inspection;
    (5) The type of equipment used to perform the inspection;
    (6) For a basic meter tube inspection, a description of findings, 
including the location and severity of pitting, obstructions, and 
buildup of foreign substances; and
    (7) For detailed meter tube inspections, information demonstrating 
that the meter tube complies with Subsection 5.1 through 5.4 of API 
14.3.2 (incorporated by reference, see Sec.  226.0) and showing all 
required measurements.
    (j) Advance notice of inspections. The lessee must notify the 
Superintendent at least 72 hours in advance of performing an inspection 
under paragraphs (d), (g), and (h) of this section or submit a monthly 
or quarterly schedule of inspections at least 15 calendar days prior to 
the date of the first inspection scheduled.
    (k) Other inspections. The lessee must conduct additional 
inspections at the Superintendent's request.
    (l) Thermometer well. Thermometer wells used for determining the 
flowing temperature of the gas and verification (test well), must be 
located in compliance with Subsection 6.5 of API 14.3.2 (incorporated 
by reference, see Sec.  226.0). Where multiple thermometer wells have 
been installed in a meter tube, the flowing temperature must be 
measured from the thermometer well closest to the primary device. 
Thermometer wells used to measure or verify flowing temperature must 
contain a thermally conductive liquid.
    (m) Sampling probe. The sampling probe must be located as specified 
in Sec.  226.130.

[[Page 2484]]

Sec.  226.122  Mechanical recorder (secondary device).

    (a) Mechanical recorders may be used as a secondary device on low- 
and very-low-volume FMPs only.
    (b) Chart recorders used in conjunction with differential-type 
meters are approved for low- and very-low-volume FMPs only.
    (c) Very-low-volume FMPs are exempt from the standards and 
requirements set forth paragraphs (e), (f), and (g) of this section.
    (d) The connection between the pressure taps and the mechanical 
recorder must meet the following requirements:
    (1) Gauge lines must:
    (i) Have a nominal diameter of not less than \3/8\ inch;
    (ii) Be sloped upwards from the pressure taps at a minimum pitch of 
one inch per foot of length with no visible sag;
    (iii) Have the same internal diameter along their entire length; 
and
    (iv) Be no longer than 6 feet.
    (2) Valves, including the valves in manifolds, must have a full-
opening internal diameter of not less than \3\/8 inch;
    (3) There must not be any tees except for the static-pressure line; 
and
    (4) There must be no connections to any other devices or more than 
one differential-pressure bellows and static pressure element.
    (e) The differential-pressure pen must record at a minimum reading 
of 10 percent of the differential-pressure bellows range for the 
majority of the flowing period. This requirement does not apply to 
inverted charts.
    (f) The flowing temperature of the gas must be continuously 
recorded and used in the volume calculations.
    (g) The following information must always be maintained at the FMP 
in a legible condition and accessible to the Superintendent:
    (1) The differential-pressure-bellows range;
    (2) The static-pressure-element range;
    (3) The temperature-element range;
    (4) The relative density (specific gravity) of the gas;
    (5) The static-pressure units of measure (psia or psig);
    (6) The elevation of, or atmospheric pressure at, the FMP;
    (7) The reference inside diameter of the meter tube;
    (8) The primary device type;
    (9) The orifice-bore or other primary device dimensions necessary 
for device verification, Beta or area ratio determination, and gas 
volume calculation;
    (10) The location of isolating flow conditioners, if used;
    (11) The location of the downstream end of the 19-tube-bundle flow 
straighteners, if used;
    (12) The date of last primary device inspection; and
    (13) The date of last meter verification.
    (h) The differential pressure, static pressure, and flowing 
temperature elements must be operated between the lower- and upper-
calibrated limits of the respective elements.


Sec.  226.123  Verification and calibration of mechanical recorder.

    (a) Verification following installation or repair.
    (1) Prior to performing any verification of a mechanical recorder, 
the lessee must perform a leak test. The test must be conducted in a 
manner that will detect leaks in all connections and fittings of the 
secondary device, including meter manifolds and verification equipment, 
isolation valves, and equalizer valves. If leaks are detected, the 
lessee must repair the leaks before proceeding with verification.
    (2) The lessee must adjust the time lag between the differential- 
and static-pressure pens, if necessary, to be \1/96\ of the chart 
rotation period measured at the chart hub.
    (3) The meter's differential pen arc must be able to duplicate the 
test chart's time arc over the full range of the test chart and must be 
adjusted if necessary.
    (4) The as-left values must be verified, in the following sequence, 
against a certified pressure device for the differential- and static-
pressure elements (if the static-pressure pen has been offset for 
atmospheric pressure, the static-pressure element range is in psia):
    (i) Zero (vented to atmosphere);
    (ii) 50 percent of element range;
    (iii) 100 percent of element range;
    (iv) 80 percent of element range;
    (v) 20 percent of element range; and
    (vi) Zero (vented to atmosphere).
    (5) The following as-left temperatures must be verified by placing 
the temperature probe in a water bath with a certified test 
thermometer:
    (i) Approximately 10 [deg]F below the lowest expected flowing 
temperature;
    (ii) Approximately 10 [deg]F above the highest expected flowing 
temperature; and
    (iii) At the expected average flowing temperature.
    (6) If any of the readings required in paragraph (a)(4) or (5) of 
this section vary from the test device reading by more than the 
following tolerance levels, the lessee must replace and verify the 
element for which readings were outside the applicable tolerances 
before returning the meter to service:
    (i) Differential pressure element, +/-0.5 percent;
    (ii) Static pressure element, +/-1.0 percent; and
    (iii) Temperature element, +/-2 [deg]F.
    (7) If the static-pressure pen is offset for atmospheric pressure, 
the atmospheric pressure must be calculated in accordance with Appendix 
A to this part and the pen must be offset prior to obtaining the as-
left verification values required in paragraph (a)(4) of this section.
    (b) Routine verification frequency. The differential pressure 
bellows, static pressure element, and temperature element must be 
verified according to the requirements in this section at the following 
frequencies:
    (1) Once every 6 months for very-low-volume FMPs; and
    (2) Once every 3 months for low-volume FMPs.
    (c) Routine verification procedures. (1) Prior to performing any 
verification required in this subpart, the lessee must perform a leak 
test in the manner specified in paragraph (a)(1) of this section.
    (2) No adjustments to the pens or linkages may be made until an as-
found verification is obtained. If the static pen has been offset for 
atmospheric pressure, the static pen must not be reset to zero until 
the as-found verification is obtained.
    (3) The lessee must obtain and verify the as-found values of 
differential and static pressure against a certified pressure device at 
the readings listed in paragraph (a)(4) of this section, subject to the 
following additional requirements:
    (i) If there is sufficient data on-site to determine the point at 
which the differential and static pens normally operate, the lessee 
must also obtain an as-found value at those points;
    (ii) If sufficient data is not available on-site, the lessee must 
also obtain as-found values at 5 percent and 10 percent of the element 
range; and
    (iii) If the static pressure pen has been offset for atmospheric 
pressure, the static-pressure element range is in units of psia.
    (4) The as-found value for temperature must be taken using a 
certified test thermometer placed in a test thermometer well if there 
is flow through the meter and the meter tube is equipped with such a 
well. If there is no flow through the meter, or if the meter is not 
equipped with a test thermometer well, the temperature probe must be 
verified by placing it in an insulated water bath along with a test 
thermometer.

[[Page 2485]]

    (5) The element undergoing verification must be calibrated 
according to manufacturer specifications if any of the as-found values 
determined under paragraph (c)(3) or (4) of this section are not within 
the tolerances specified in paragraph (a)(6) of this section, when 
compared to the values applied by the test equipment.
    (6) The lessee must adjust the time lag between the differential- 
and static-pressure pens, if necessary, to be \1/96\ of the chart 
rotation period, measured at the chart hub.
    (7) The meter's differential pen arc must be able to duplicate the 
test chart's time arc over the full range of the test chart and must be 
adjusted if necessary.
    (8) If any adjustment to the meter was made, the lessee must 
perform an as-left verification on each element adjusted using the 
procedures in paragraphs (c)(3) and (4) of this section.
    (9) If, after an as-left verification, any of the readings required 
by paragraphs (c)(3) and (4) of this section vary by more than the 
tolerances set forth in paragraph (a)(6) of this section when compared 
with the test device reading, the lessee must replace and verify any 
element which has readings outside of the applicable tolerances under 
this section before returning the meter to service.
    (10) If the static-pressure pen is offset for atmospheric pressure:
    (i) The atmospheric pressure must be calculated in accordance with 
Appendix A to this part; and
    (ii) The pen must be offset prior to obtaining the as-left 
verification values required in paragraph (c)(3) of this section.
    (d) The lessee must retain documentation of each verification and 
make such documentation available to the Superintendent upon request. 
The documentation must include:
    (1) The date and time of the verification;
    (2) The date of the prior verification;
    (3) Primary device data (reference inside diameter of the meter 
tube and differential-device size and Beta or area ratio) if the 
orifice plate is pulled and inspected;
    (4) The type and location of taps (flange or pipe, upstream or 
downstream static tap);
    (5) The atmospheric pressure used to offset the static-pressure 
pen, if applicable;
    (6) Mechanical recorder data (differential pressure, static 
pressure, and temperature element ranges);
    (7) The normal operating points for differential pressure, static 
pressure, and flowing temperature;
    (8) The verification points (as-found and applied) for each 
element;
    (9) The verification points (as-left and applied) for each element 
if a calibration is performed; and
    (10) The name and contact information for each individual who 
performed or witnessed the verification, if applicable.
    (e) Notification of verification. (1) For verifications performed 
after installation or following repair, the lessee must notify the 
Superintendent at least 72 hours before conducting the verification.
    (2) For routine verifications, the lessee must notify the 
Superintendent at least 72 hours before conducting the verification or 
must submit a monthly or quarterly verification schedule to the 
Superintendent in advance.
    (f) Correction of reported volumes. If during the verification, the 
combined errors in as-found differential pressure, static pressure, and 
flowing temperature taken at the normal operating points tested 
resulted in a flow-rate error greater than 2 percent and 2 Mcf/day, the 
volumes reported to ONRR must be corrected beginning with the date that 
the inaccuracy occurred. If such date is unknown, the volumes must be 
corrected beginning with the production month that includes the date 
that is halfway between the date of the last verification and the date 
of the current verification. Corrected reports must be submitted to 
ONRR within 30 calendar days of discovery of the error in the reported 
volumes.
    (g) Test equipment certification. Test equipment used to verify or 
calibrate elements at an FMP must be certified at least once every two 
years. Documentation of the recertification must be available on site 
during all verifications and must show the:
    (1) Test equipment serial number, make, and model;
    (2) Date that recertification took place;
    (3) Test equipment measurement range; and
    (4) Uncertainty determined or verified as part of the 
recertification.


Sec.  226.124   Integration statements.

    (a) The lessee must retain an unedited integration statement and 
make such statement available to the Superintendent upon request. The 
integration statement must contain the following:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) The name of the company performing the integration;
    (5) The month and year to which the integration statement applies;
    (6) The reference inside diameter of the meter tube (inches);
    (7) The orifice bore diameter (inches) or Beta or area ratio and 
discharge coefficient, as applicable, and any other information 
necessary to calculate flow rate;
    (8) The relative density (specific gravity);
    (9) The CO2 content (mole percent);
    (10) The Dinitrogen (N2) content (mole percent);
    (11) The heating value calculated under Sec.  226.140 (Btu/standard 
cubic feet);
    (12) The atmospheric pressure or elevation at the FMP;
    (13) The pressure base;
    (14) The temperature base;
    (15) The static-pressure tap location (upstream or downstream);
    (16) The chart rotation (hours or days);
    (17) The differential-pressure bellows range (inches of water);
    (18) The static-pressure element range (psi); and
    (19) For each chart integrated:
    (i) The date and time on, and date and time off;
    (ii) The average differential pressure (inches of water)
    (iii) The average static pressure;
    (iv) The static-pressure units of measure (psia or psig);
    (v) The average temperature ([deg]F);
    (vi) The integrator counts or extension;
    (vii) The hours of flow; and
    (viii) The volume (Mcf).
    (b) The volume for each chart integrated must be determined as 
follows:

V = IMV x IV

Where:

V = reported volume, Mcf
IMV = integral multiplier value, as calculated under this section
IV = the integral value determined by the integration process (also 
known as the ``extension,'' ``integrated extension,'' and 
``integrator count'')

    (1) If the primary device is a flange-tapped orifice plate, a 
single IMV must be calculated for each chart or chart interval using 
the following equation:

[[Page 2486]]

[GRAPHIC] [TIFF OMITTED] TP13JA23.009

Where:

Cd = discharge coefficient or flow coefficient, 
calculated under API 14.3.3 or Section 5 of AGA Report No. 3 (both 
incorporated by reference, see Sec.  226.0)
[beta] = beta ratio
Y = gas expansion factor, calculated under Subsection 5.6 of API 
14.3.3, or Section 5 of AGA Report No. 3 (both incorporated by 
reference, see Sec.  226.0)
d = orifice diameter, in inches
Zb = supercompressibility at base pressure and 
temperature
Gr = relative density (specific gravity)
Zf = supercompressibility at flowing temperature and 
pressure
Tf = average flowing temperature, in degrees Rankine

    (2) Variables that are functions of differential pressure, static 
pressure, or flowing temperature (e.g., Cd, Y, 
Zf) must use the average values of differential pressure, 
static pressure, and flowing temperature as determined from, and 
reported on, the integration statement for the chart or chart interval 
integrated. The flowing temperature must be the average flowing 
temperature reported on the integration statement for the chart or 
chart interval being integrated.
    (c) Atmospheric pressure used to convert static pressure in psig to 
static pressure in psia, must be determined in accordance with Appendix 
A to this part.


Sec.  226.125   Electronic gas measurement (secondary and tertiary 
device).

    (a) All electronic gas measurement systems (EGMs) must meet the 
requirements set forth in Section 9 and Subsection 4.4.5 of API 21.1 
(incorporated by reference, see Sec.  226.0).
    (b) Very-low-volume FMPs are exempt from the standards and 
requirements set forth in paragraphs (c), (f), and (g) of this section.
    (c) The connection between pressure taps and the secondary device 
must meet the following requirements:
    (1) If gauge lines are used, they must:
    (i) Have a nominal diameter of not less than \3/8\ inch;
    (ii) Be sloped upwards from the pressure taps at a minimum pitch of 
one inch per foot of length, with no visible sag;
    (iii) Have the same internal diameter along their entire length; 
and
    (iv) Be no longer than 6 feet.
    (2) Valves, including the valves in manifolds, must have a full-
opening internal diameter of not less than \3/8\ inch;
    (3) There must not be any tees, except for the static pressure 
line; and
    (4) There must be no connections to any other devices or more than 
one differential pressure and static pressure transducer, except that 
where the lessee is employing redundancy verification, two differential 
pressure and two static pressure transducers may be connected.
    (d) Each FMP must include a display that:
    (1) Is readable without the need for data collection units, laptop 
computers, a password, or any special equipment;
    (2) Is on-site and in a location that is accessible to the 
Superintendent;
    (3) Includes the units of measure for each required variable;
    (4) Displays the previous day's volume and the following variables 
consecutively:
    (i) Current flowing static pressure with units (psia or psig);
    (ii) Current differential pressure (inches of water);
    (iii) Current flowing temperature ([deg]F);
    (iv) Current flow rate (Mcf/day or scf/day); and
    (5) Displays an hourly or daily QTR no more than 31 calendar days 
old and shows the following information:
    (i) The previous period (for this section, previous period means at 
least 1 day prior, but no longer than 1 month prior) average 
differential pressure (inches of water);
    (ii) The average static pressure with units (psia or psig); and
    (iii) The average flowing temperature ([deg]F).
    (e) The lessee must always maintain the following at the FMP in 
legible condition and accessible to the Superintendent:
    (1) The unique meter identification number;
    (2) The relative density (specific gravity);
    (3) The elevation of, or the atmospheric pressure at, the FMP;
    (4) Primary device information, such as orifice bore diameter 
(inches) or Beta or area ratio and discharge coefficient, as 
applicable;
    (5) The reference inside diameter of meter tube;
    (6) The make, model, and location of isolating flow conditioners, 
if used;
    (7) The location of the downstream end of 19-tube-bundle flow 
straighteners, if used;
    (8) The upper calibrated limit for each transducer;
    (9) The location of the static-pressure tap (upstream or 
downstream);
    (10) The date of last orifice plate inspection;
    (11) The date of last meter tube inspection; and
    (12) The date of last secondary device inspection.
    (f) The differential pressure, static pressure, and flowing 
temperature transducers must be operated between the upper and lower 
calibrated limits of the transducer.
    (g) The flowing temperature of the gas must be continuously 
measured and used in the flow-rate calculations in accordance with 
Section 4 of API 21.1 (incorporated by reference, see Sec.  226.0).


Sec.  226.126  Verification and calibration of electronic gas 
measurement systems.

    (a) Transducer verification and calibration after installation or 
repair. (1) Prior to performing any verification required in this 
section, the lessee must perform a leak test in the manner set forth in 
Sec.  226.123(a)(1).
    (2) The lessee must verify the points listed in Subsection 7.3.3 of 
API 21.1 (incorporated by reference, see Sec.  226.0), by comparing the 
values from the certified test device with the values used by the flow 
computer to calculate flow rate. If any of these as-left readings vary 
from the test equipment reading by more than the tolerance calculated 
using Subsection 8.2.2.2, Equation 24 of API 21.1 (incorporated by 
reference, see Sec.  226.0), the transducer must be replaced and tested 
under this paragraph.
    (3) For absolute static pressure transducers, the value of 
atmospheric pressure used when the transducer is vented to atmosphere 
must be calculated in accordance with Appendix A to this part, measured 
by a NIST-certified barometer with a stated accuracy of +/-0.06 psi 
(4 millibars) or better, or obtained from an absolute 
pressure calibration device.
    (4) Prior to putting the meter into service, the differential 
pressure transducer must be tested at zero with full working pressure 
applied to both sides of the transducer. If the absolute value of the 
transducer reading is greater than the reference accuracy of the 
transducer, expressed in inches of water column, the transducer must be 
re-zeroed.
    (b) Routine verification frequency. (1) If redundancy verification 
under

[[Page 2487]]

paragraph (d) of this section is not used, the differential pressure, 
static pressure, and temperature transducers must be verified in 
accordance with the procedures set forth in paragraph (c) of this 
section at the following frequencies:
    (i) Once every 24 months for low-volume and very-low-volume FMPs;
    (ii) Once every 6 months for high-volume and very-high-volume FMPs.
    (2) If redundancy verification under paragraph (d) of this section 
is used, the differential pressure, static pressure, and temperature 
transducers must be verified in accordance with the procedures set 
forth therein. In addition, the temperature transducers must be 
verified in accordance with the procedures set forth in paragraph (c) 
of this section at least once a year.
    (c) Routine verification procedures. Verifications must be 
performed in accordance with Subsection 8.2 of API 21.1 (incorporated 
by reference, see Sec.  226.0), subject to the following exceptions, 
additions, and clarifications:
    (1) Prior to performing any verification required under this 
section, the lessee must perform a leak test in the manner set forth in 
Sec.  226.123(a)(1).
    (2) An as-found verification for differential pressure, static 
pressure, and temperature must be conducted at the normal operating 
point of each transducer.
    (i) The normal operating point is the mean value taken over a 
previous time period that is not less than one day, or greater than one 
month, prior. Acceptable mean values include means that are weighted 
based on flow time and flow rate.
    (ii) For differential and static pressure transducers, the pressure 
applied to the transducer must be within five percentage points of the 
normal operating point.
    (iii) For the temperature transducer, the water bath or test 
thermometer well must be within 20 [deg]F of the normal operating point 
for temperature.
    (3) If a transducer is calibrated, the as-left verification must 
include the normal operating point of that transducer, as defined in 
paragraph (c)(2) of this section.
    (4) The as-found values for differential pressure obtained with the 
low side vented to atmospheric pressure must be corrected to working 
pressure values using Annex H, Equation H.1 of API 21.1 (incorporated 
by reference, see Sec.  226.0).
    (5) The verification tolerance for differential and static pressure 
is calculated using Subsection 8.2.2.2, Equation 24 of API 21.1 
(incorporated by reference, see Sec.  226.0). The verification 
tolerance for temperature is equivalent to the uncertainty of the 
temperature transmitter or 0.5 [deg]F, whichever is greater.
    (6) All required verification points must be within the applicable 
verification tolerance before returning the meter to service.
    (7) Prior to putting a meter into service, the differential 
pressure transducer must be tested at zero with full working pressure 
applied to both sides of the transducer. If the absolute value of the 
transducer reading is greater than the reference accuracy of the 
transducer, as expressed in inches of water column, the transducer must 
be re-zeroed.
    (d) Redundancy verification procedures. Redundancy verification 
must be performed as required under Subsection 8.2 of API 21.1 
(incorporated by reference, see Sec.  226.0), subject to the following 
exceptions, additions, and clarifications:
    (1) The lessee must identify which set of transducers is used for 
reporting on the Form ONRR-4054 (the primary transducers) and which set 
of transducers is used as a check (the check set of transducers);
    (2) For every calendar month, the lessee must compare the flow-time 
linear averages of differential pressure, static pressure, and 
temperature readings from the primary transducers with those from the 
check transducers; and
    (3) If for any transducer the difference between the averages 
exceeds the tolerance defined by the equation below, the lessee must 
verify both the primary and check transducer under paragraph (c) of 
this section within the first five days of the month following the 
month in which the redundancy verification was performed. For example, 
if the redundancy verification for March reveals that the difference in 
flow-time linear averages of differential pressure exceeded the 
verification tolerance, both the primary and check differential-
pressure transducers must be verified under paragraph (c) of this 
section by April 5th.
[GRAPHIC] [TIFF OMITTED] TP13JA23.010


Where:

AP is the reference accuracy of the primary transducer 
and
AC is the reference accuracy of the check transducer

    (e) Documentation of verifications. The lessee must retain 
documentation of each verification and make such documentation 
available to the Superintendent upon request. The documentation must 
include the following:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) The date and time of verification, and date of the last 
verification;
    (5) Primary device information (reference inside diameter of the 
meter tube and orifice plate or differential device size, and Beta or 
area ratio);
    (6) The type and location of taps (flange or pipe, upstream or 
downstream, static tap);
    (7) The upper calibrated limit for each transducer;
    (8) The normal operating points for differential pressure, static 
pressure, and flowing temperature;
    (9) The atmospheric pressure;
    (10) The verification points (as-found and applied) for each 
transducer;
    (11) The verification points (as-left and applied) for each 
transducer if calibration was performed;
    (12) The differential device date of inspection and condition 
(e.g., clean, sharp edge, or surface condition);
    (13) The verification equipment make, model, range, accuracy, and 
date of last certification; and
    (14) The name(s) and contact information for individuals that 
performed or witnessed the verification, if applicable.
    (f) Notification of verification. (1) The lessee must notify the 
Superintendent at least 72 hours before conducting verifications after 
installation or following repair.
    (2) The lessee must notify the Superintendent at least 72 hours 
before conducting routine verifications or provide the Superintendent 
with a monthly or quarterly verification schedule in advance.
    (g) Correction of reported volumes. If during the verification, the 
combined errors in as-found differential pressure, static pressure, and 
flowing temperature taken at the normal operating points tested result 
in a flow-rate error greater than 2 percent and 2 Mcf/day, the volumes 
reported to ONRR must be corrected beginning with the date that the 
inaccuracy occurred. If that date is unknown, the volumes must be 
corrected beginning with the production month that includes the date 
that is halfway between the date of the last verification and the date 
of the present verification. Corrected reports must be submitted to 
ONRR within 30 calendar days of discovery of the error in the reported 
volumes.
    (h) Certification of test equipment. Test equipment used to verify 
or calibrate transducers at an FMP must be

[[Page 2488]]

certified at least once every two years. Documentation of the 
certification must be on-site and available to the Superintendent 
during all verifications. Such documentation must show the:
    (1) Test equipment serial number, make and model;
    (2) Date that recertification took place;
    (3) Test equipment measurement range; and
    (4) Uncertainty determined or verified as part of the 
recertification.
    (i) Accuracy standards for test equipment. Test equipment used to 
verify or calibrate transducers at an FMP must meet the following 
accuracy standards:
    (1) The accuracy of the test equipment, stated in actual units of 
measure, must be no greater than 0.5 times the reference accuracy of 
the transducer being verified, also stated in actual units of measure; 
or
    (2) The equipment must have a stated accuracy of 0.10 percent of 
the upper calibrated limit of the transducer being verified.


Sec.  226.127  Flow rate, volume, and average value calculation.

    (a) For flange-tapped orifice plates, the flow rate must be 
calculated under:
    (1) Sections 4 and 5 of API 14.3.3 (incorporated by reference, see 
Sec.  226.0); and
    (2) AGA Report No. 8 (incorporated by reference, see Sec.  226.0), 
for supercompressibility.
    (b) Atmospheric pressure used to convert static pressure in psig to 
static pressure in psia must be determined using Appendix A of this 
part.
    (c) Hourly and daily gas volumes, average values of the live input 
variables, flow time, and integral value or average extension required 
under Sec.  226.128 must be determined using Section 4 and Annex B of 
API 21.1 (incorporated by reference, see Sec.  226.0).


Sec.  226.128  Logs and records.

    (a) The lessee must retain, and make available to the 
Superintendent upon request, the original, unaltered, unprocessed, and 
unedited daily and hourly QTRs, which must contain the information 
identified in Subsection 5.2 of API 21.1 (incorporated by reference, 
see Sec.  226.0), subject to the following additions and 
clarifications:
    (1) The QTRs must contain the lessee's name, lease number, and well 
or facility name and number;
    (2) The volume, flow time, and integral value or average extension 
must be reported to at least five significant digits;
    (3) The average differential pressure, static pressure, and 
temperature, as calculated in Sec.  226.127(c), must be reported to at 
least three significant digits; and
    (4) The QTRs must include a statement indicating whether the lessee 
submitted the integral value or average extension.
    (b) The lessee must retain, and make available to the 
Superintendent upon request, the original unaltered, unprocessed, and 
unedited configuration log, which must contain the information 
specified in Subsection 5.4 (including the flow-computer snapshot 
report in Subsection 5.4.2) of API 21.1 and Annex G of API 21.1 (both 
incorporated by reference, see Sec.  226.0), as well as the following:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) For very-low-volume FMPs only, the fixed temperature, if not 
continuously measured ([deg]F); and
    (5) The static-pressure tap location (upstream or downstream).
    (c) The lessee must retain, and make available to the 
Superintendent upon request, the original, unaltered, unprocessed, and 
unedited event log. The event log must comply with the requirements set 
forth in Subsection 5.5 of API 21.1 (incorporated by reference, see 
Sec.  226.0), and must have sufficient capacity to be retrieved and 
stored at intervals that will maintain a continuous record of events 
for the required six-year retention period or the life of the FMP, 
whichever is shorter.
    (d) The lessee must retain, and make available to the 
Superintendent upon request, an alarm log. The alarm log must comply 
with the requirements set forth in Subsection 5.6 of API 21.1 
(incorporated by reference, see Sec.  226.0).


Sec.  226.129  Gas sampling and analysis.

    (a) Samples must be taken using one of the following methods:
    (1) Spot sampling under Sec. Sec.  226.131, 226.132, and 226.133;
    (2) Flow-proportional composite sampling under Sec.  226.134; or
    (3) On-line gas chromatograph under Sec.  226.135.
    (b) At all times during the sampling process, the minimum 
temperature of all gas sampling components must be the lesser of:
    (1) The flowing temperature of the gas measured at the time of 
sampling; or
    (2) 30 [deg]F above the calculated hydrocarbon dew point of the 
gas.


Sec.  226.130  Sampling probe and tubing.

    (a) Exemptions. Very-low-volume FMPs are exempt from the standards 
and requirements set forth in this section.
    (b) Location of sample probe. (1) The sampling probe must be 
located as specified in Subsection 6.4.2 of API 14.1 (incorporated by 
reference, see Sec.  226.0) and must be the first obstruction 
downstream of the primary device.
    (2) The sample probe must be exposed to the same ambient 
temperature as the primary device. The lessee may accomplish this by 
physically locating the sample probe in the same ambient temperature 
conditions as the primary device (such as in a heated meter house) or 
by installing insulation and/or heat tracing along the entire meter 
run.
    (c) Sample probe design and type. (1) Sample probes must be made 
from stainless steel.
    (2) If a regulating type of sample probe is used, the pressure-
regulating mechanism must be inside the pipe or maintained at a 
temperature of at least 30 [deg]F above the hydrocarbon dew point of 
the gas.
    (3) The sample probe length must be the shorter of the:
    (i) Length necessary to place the collection end of the probe in 
the center one-third of the pipe cross-section; or (ii) Recommended 
probe length in Subsection 6.4, Table 1 of API 14.1 (incorporated by 
reference, see Sec.  226.0).
    (4) The use of membranes, screens, or filters at any point in the 
sample probe is prohibited.
    (d) Sample tubing type. Sample tubing connecting the sample probe 
to the sample container or analyzer must be made of stainless steel or 
nylon 11.


Sec.  226.131  Spot samples--general requirements.

    (a) Sampling while flowing. The FMP must be flowing when a gas 
sample is taken. If an FMP is in non-flowing status on the date that a 
sample is due under Sec.  226.133, no sample is required. The lessee 
must take a sample within 15 calendar days of the date that flow to the 
FMP is reinitiated. For purposes of this section, non-flowing status 
means there has been no flow through the FMP for at least 30 
consecutive days. Non-flowing status does not apply to meters at FMPs 
that flow intermittently on a daily or weekly basis.
    (b) Notice of spot samples. The lessee must provide the 
Superintendent with at least 72 hours' advance notice before obtaining 
a spot sample or submit a monthly or quarterly sampling schedule to the 
Superintendent in advance of taking samples.
    (c) Sample cylinder requirements. Sample cylinders must:
    (1) Comply with the requirements set forth in Subsection 9.1 of API 
14.1 (incorporated by reference, see Sec.  226.0);
    (2) Have a minimum capacity of 300 cubic centimeters; and

[[Page 2489]]

    (3) Be cleaned prior to sampling in accordance with Appendix A of 
GPA 2166-17 (incorporated by reference, see Sec.  226.0) or an 
equivalent method. The lessee must maintain documentation of cleaning, 
have the documentation on-site during sampling, and provide the 
documentation to the Superintendent upon request.
    (d) Spot sampling using portable gas chromatographs. (1) If used, 
sampling separators must be:
    (i) Constructed of stainless steel;
    (ii) Cleaned prior to sampling in accordance with Appendix A of GPA 
2166-17 (incorporated by reference, see Sec.  226.0) or an equivalent 
method. The lessee must maintain documentation of cleaning, have the 
documentation on-site during sampling, and provide the documentation to 
the Superintendent upon request; and
    (iii) Operated under Appendix B.3 of GPA 2166-17 (incorporated by 
reference, see Sec.  226.0).
    (2) The sample port and inlet to the sample line must be purged 
using the gas being sampled before completing the connection between 
them.
    (3) The portable gas chromatograph must be operated, verified, and 
calibrated as set forth in Sec.  226.136 and documentation of such 
verification and calibration must be available for inspection by the 
Superintendent at the time of sampling.
    (4) The documentation of verification or calibration required in 
Sec.  226.136(e) must be available for the Superintendent's inspection 
at the time of sampling.
    (5) The minimum number of samples and analyses is as follows:
    (i) For low-volume and very-low-volume FMPs, at least three samples 
must be taken and analyzed;
    (ii) For high-volume FMPs, samples must be taken and analyzed until 
the difference between the maximum and minimum heating values 
calculated based on three consecutive analyses is less than or equal to 
16 Btu/scf; and
    (iii) For very-high-volume FMPs, samples must be taken and analyzed 
until the difference between the maximum and minimum heating values 
calculated based on three consecutive analyses is less than or equal to 
8 Btu/scf.
    (6) Unless the Superintendent approves an alternative method of 
calculation, the heating value and relative density used for reporting 
to ONRR must be either the mean or median heating value and relative 
density calculated from the three analyses required in paragraph (d)(5) 
of this section.


Sec.  226.132  Spot samples--allowable methods.

    (a) Spot samples must be obtained using one of the following 
methods:
    (1) Purging--fill and empty method. Samples taken using this method 
must comply with the requirements set forth in Section 9.1 of GPA 2166-
17 (incorporated by reference, see Sec.  226.0);
    (2) Helium ``pop'' method. Samples taken using this method must 
comply with the requirements set forth in Section 9.5 of GPA 2166-17 
(incorporated by reference, see Sec.  226.0). The lessee must maintain 
documentation demonstrating that the cylinder was evacuated and pre-
charged before sampling and make such documentation available to the 
Superintendent upon request;
    (3) Floating piston cylinder method. Samples taken using this 
method must comply with the requirements set forth in Sections 9.7.1 
and 9.7.3 of GPA 2166-17 (incorporated by reference, see Sec.  226.0). 
The lessee must maintain documentation of the seal material and type of 
lubricant used and make such documentation available to the 
Superintendent upon request;
    (4) Portable gas chromatograph. Samples taken using this method 
must comply with Sec.  226.136; or
    (5) Alternative methods. Other methods the Superintendent approves.
    (b) If the lessee uses the sampling methods in paragraph (a)(1) or 
(2) of this section and the flowing pressure at the sample port is less 
than or equal to 15 psig, the lessee may also employ a vacuum gathering 
system. Samples taken using a vacuum-gathering system must comply with 
the requirements set forth in Subsection 11.10 of API 14.1 
(incorporated by reference, see Sec.  226.0) and the samples must be 
obtained from the discharge of the vacuum pump.


Sec.  226.133  Spot samples--frequency.

    (a) Spot samples must be taken and analyzed at the following 
frequencies:
    (1) Once every 12 months for very-low-volume FMPs;
    (2) Once every 6 months for low-volume FMPs;
    (3) One every 3 months for high-volume FMPs; and
    (4) Once a month for very-high-volume FMPs.
    (b) The Superintendent may change the required sampling frequency 
for high- and very-high-volume FMPs if a determination is made that the 
frequency under paragraph (a) of this section does not achieve the 
heating value uncertainty levels required in Sec.  226.120(b).
    (1) The Superintendent may change the sampling frequency no sooner 
than [two years from effective date of final rule].
    (2) The new sampling frequency will remain in effect until the 
heating value variability justifies a different frequency.
    (3) The Superintendent may not change the sampling frequency to 
more than once every two weeks or less than once every six months.
    (c) The time between any two spot samples must not exceed:
    (1) 18 calendar days, if the required sampling frequency is every 
two weeks;
    (2) 45 calendar days, if the required sampling frequency is once a 
month;
    (3) 105 calendar days, if the required sampling frequency is once 
every 3 months;
    (4) 195 calendar days, if the required sampling frequency is once 
every 6 months; and
    (5) 380 calendar days, if the required sampling frequency is once 
every 12 months.


Sec.  226.134  Composite sampling methods.

    (a) Composite samplers must be flow-proportional.
    (b) Samples must be collected using a positive-displacement pump.
    (c) Sample cylinders must be sized to ensure the cylinder capacity 
is not exceeded within the normal collection frequency.


Sec.  226.135  On-line gas chromatographs.

    (a) On-line gas chromatographs must be installed, operated, and 
maintained in accordance with, Appendix D of GPA 2166-17 (incorporated 
by reference, see Sec.  226.0), and the manufacturer's specifications, 
instructions, and recommendations.
    (b) On-line gas chromatographs must comply with the verification 
and calibration requirements set forth in Sec.  226.136. The lessee 
must maintain documentation of verifications and calibrations and make 
such documentation available to the Superintendent upon request.


Sec.  226.136  Gas chromatographs.

    (a) All gas chromatographs must be installed, operated, and 
calibrated in accordance with GPA 2261-20 (incorporated by reference, 
see Sec.  226.0).
    (b) Gas chromatographs must be verified under the requirements in 
paragraph (c) of this section not less than once every seven calendar 
days.
    (c) Verifications must be performed in accordance with 2261-20 
(incorporated by reference, see Sec.  226.0), with the following 
additions and clarifications:
    (1) All gases used for verification and calibration must meet the 
standards of Sections 3 and 4 of GPA 2198-16 (incorporated by 
reference, see Sec.  226.0);

[[Page 2490]]

    (2) All new gases used for verification and calibration must be 
authenticated prior to verification or calibration in accordance with 
Section 6 of GPA 2198-16 (incorporated by reference, see Sec.  226.0);
    (3) The gas used to calibrate a gas chromatograph must be 
maintained in accordance with Section 5 of GPA 2198-16 (incorporated by 
reference, see Sec.  226.0);
    (4) If the composition of the gas used for verification as 
determined by the gas chromatograph varies from the certified 
composition of the gas used for verification by more than the 
reproducibility values in Section 10 of GPA 2261-20, the gas 
chromatograph must be calibrated in accordance with Section 6 of GPA 
2261-20 (both incorporated by reference, see Sec.  226.0); and
    (5) If the gas chromatograph is calibrated, it must be re-verified 
under paragraph (c)(4) of this section.
    (d) Samples must be analyzed until the un-normalized sum of the 
mole percent of all gases analyzed is between 97 and 103 percent.
    (e) The lessee must retain documentation of the verifications and 
make such documentation available to the Superintendent upon request. 
The documentation must include:
    (1) The components analyzed;
    (2) The response factor for each component;
    (3) The peak area for each component;
    (4) The mole percent of each component as determined by the gas 
chromatograph;
    (5) The mole percent of each component in the gas used for 
verification;
    (6) The difference between the mole percentages determined in 
paragraphs (e)(4) and (5) of this section, expressed in relative 
percent;
    (7) Evidence that the gas used for verification and calibration:
    (i) Meets the requirements of paragraph (c)(2) of this section, 
including a unique identification number of the calibration gas used, 
the name of the supplier of the calibration gas, and the certified list 
of the mole percent of each component in the calibration gas;
    (ii) Was authenticated under paragraph (c)(3) of this section prior 
to verification or calibration, including the fidelity plots; and
    (iii) Was maintained under paragraph (c)(4) of this section, 
including the fidelity plot made as part of the calibration run;
    (8) The chromatograms generated during the verification process;
    (9) The time and date the verification was performed; and
    (10) The name and affiliation of the person performing the 
verification.


Sec.  226.137  Components to analyze.

    (a) Low- and very-low-volume FMPs are exempt from the standards and 
requirements set forth in paragraphs (c), (d), and (e) of this section.
    (b) Gas must be analyzed for the following components:
    (1) Methane;
    (2) Ethane;
    (3) Propane;
    (4) Isobutane;
    (5) Normal Butane;
    (6) Pentanes;
    (7) Hexanes + (C6+);
    (8) Carbon dioxide; and
    (9) Nitrogen.
    (c) When the concentration of C6+ exceeds 0.5 mole 
percent, hexanes, heptanes, octanes, and Nonanes-plus (C9+) 
must also be analyzed.
    (d) In lieu of testing each sample for the components required 
under paragraph (c) of this section, the lessee may periodically test 
for these components and adjust the assumed C6+ composition 
to remove bias in the heating value. The adjusted C6+ 
composition must be applied to the mole percent of C6+ 
analyses until the next analysis is done under paragraph (c) of this 
section.
    (e) The minimum analysis frequency for components listed in 
paragraph (c) of this section is:
    (1) Once every 12 months, for high-volume FMPs; and
    (2) Once every 6 months, for very-high-volume FMPs.


Sec.  226.138  Gas analysis report requirements.

    (a) The gas analysis report must contain the following information:
    (1) The lessee's name;
    (2) The lease number;
    (3) The well or facility name and number;
    (4) The date and time the sample or spot samples were taken or, for 
composite samples, the date the cylinder was installed and date it was 
removed;
    (5) The date and time of the analysis;
    (6) For spot samples, the effective date, if other than the date of 
sampling;
    (7) For composite samples, the effective start and end dates;
    (8) The name of the laboratory where the analysis was performed, if 
applicable;
    (9) The device used for analysis (i.e., gas chromatograph, 
calorimeter, or mass spectrometer);
    (10) The make and model of the analyzer;
    (11) The date of the last verification or calibration of the 
analyzer;
    (12) The flowing temperature at the time of sampling;
    (13) The flowing pressure at the time of sampling, including units 
of measure (psia or psig);
    (14) The flow rate at the time of sampling;
    (15) The ambient air temperature at the time of sampling;
    (16) Whether or not heat trace or any other method of heating was 
used;
    (17) The type of sample (i.e., spot-cylinder, spot-portable gas 
chromatograph, composite);
    (18) The sampling method if spot-cylinder (e.g., fill and empty, 
helium pop);
    (19) A list of the components tested;
    (20) The total un-normalized mole percent of the components tested;
    (21) The normalized mole percent of each component tested, 
including a summation of those mole percentages;
    (22) The ideal heating value (Btu/scf);
    (23) The real heating value (Btu/scf), dry basis;
    (24) The hexanes-plus heating value (Btu/scf), if applicable;
    (25) The pressure base and temperature base;
    (26) The relative density; and
    (27) The name of company obtaining the gas sample.
    (b) Components that are listed on the analysis report but are not 
tested must be annotated as such.
    (c) The heating value and relative density must be calculated using 
API 14.5 (incorporated by reference, see Sec.  226.0).
    (d) The base supercompressibility must be calculated using AGA 
Report No. 8 (incorporated by reference, see Sec.  226.0).
    (e) The lessee must submit all gas analysis reports to the 
Superintendent within 14 calendar days after the due date for the 
sample as specified in Sec.  226.133.


Sec.  226.139  Effective date of a spot or composite gas sample.

    (a) Unless otherwise specified in the gas analysis report, the 
effective date of a spot sample is the date on which the sample was 
taken. The effective date of a spot sample may be no later than the 
first day of the production month following the lessee's receipt of the 
laboratory analysis of the sample.
    (b) Unless otherwise specified in the gas analysis report, the 
effective date of a composite sample is the first day of the month in 
which the sample was removed.


Sec.  226.140  Calculation of heating value and volume.

    (a) Heating value of sample. The heating value of gas sampled must 
be calculated as follows:

[[Page 2491]]

    (1) Gross heating value is defined in Subsection 3.7 of API 14.5, 
and must be calculated using Subsection 7.1 of API 14.5 (incorporated 
by reference, see Sec.  226.0); and
    (2) Real heating value must be calculated by dividing the gross 
heating value of the gas calculated under paragraph (a)(1) of this 
section by the compressibility factor of the gas at 14.73 psia and 60 
[deg]F.
    (b) Average heating value. (1) If a lease has more than one FMP, 
the average heating value for the lease for a reporting month must be 
the volume-weighted average of heating values, calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA23.011


Where:

HV = the average heating value for the lease for the reporting 
month, in Btu/scf
HVi = the heating value for FMPi during the reporting 
month (see Sec.  226.140(a)(2), if an FMP has multiple heating 
values during the reporting month), in Btu/scf
Vi = the volume measured by FMPi during the reporting month, in Btu/
scf
i = each FMP for the lease
n = the number of FMPs for the lease

    (2) If the effective date of a heating value for an FMP is other 
than the first day of the reporting month, the average heating value of 
the FMP must be the volume-weighted average of heating values, 
determined as follows:
[GRAPHIC] [TIFF OMITTED] TP13JA23.012


Where:

HVi = the heating value for FMPi, in Btu/scf
HVi,j = the heating value for FMPi, for partial month j, 
in Btu/scf
Vi,j = the volume measured by FMPi, for partial month j, 
in Btu/scf
i = represents each FMP for the lease
j = represents a partial month for which heating value HVi,j is 
effective
m = the number of different heating values in a reporting month for 
an FMP

    (c) Calculation of volume. The volume must be determined under 
Sec.  226.124(b) and (c) (mechanical recorders) or Sec.  226.125(c) 
(electronic gas measurement systems).


Sec.  226.141  Reporting of heating value and volume.

    (a) Reported gross and real heating values. The gross heating value 
and real heating value, or average gross heating value and average real 
heating value, as applicable, derived from all samples and analyses 
must be reported to ONRR in units of Btu/scf under the following 
conditions:
    (1) Containing no water vapor (``dry''), unless the water vapor 
content has been determined through actual on-site measurement, 
included in heating value calculations, and reported on the gas 
analysis report. The heating value may not be reported based on assumed 
water vapor content. Acceptable methods of measuring water vapor are 
chilled mirror and other methods the Superintendent approves;
    (2) Adjusted to a pressure of 14.73 psia and a temperature of 60 
[deg]F; and
    (3) For samples analyzed under Sec.  226.137(a), notwithstanding 
any provision of a contract between the lessee and purchaser or 
transporter, the composition of hexanes + must have a heating value of 
not less than:
    (i) 5,129 Btu/scf (equivalent heating value of 60 percent hexanes, 
30 percent heptanes, and 10 percent octanes); or
    (ii) The heating value of the C9+ composition determined 
under Sec.  226.137(c).
    (b) Reported volume. The volume for royalty purposes must be 
reported to ONRR in units Mcf, as follows:
    (1) The volume must not be adjusted for water-vapor content or any 
other factors that are not included in calculations required in Sec.  
226.124(b) and (c) or Sec.  226.127; and
    (2) The volume must match the monthly volume(s) shown in the 
unedited QTR(s) or integration statement(s) unless edits to the data 
are documented under paragraph (c) of this section.
    (c) Edits and adjustments to reported heating value or volume. (1) 
If there are measurement errors stemming from an equipment malfunction 
that results in discrepancies in the calculated heating value or volume 
of the gas, the heating value or volume reported during the period in 
which the error persisted must be estimated.
    (2) All edits made to the data before the report is submitted to 
ONRR must be documented and include verifiable justifications for the 
edits made. Such documentation must be available to the Superintendent 
and ONRR upon request.
    (3) All values on daily and hourly QTRs that have been changed or 
edited must be clearly identified and cross referenced to the 
justification required in paragraph (c)(2) of this section.
    (4) The volumes reported to ONRR must be corrected beginning with 
the date that the inaccuracy occurred. If the date is unknown, the 
volumes must be corrected beginning with the production month that 
includes the date that is halfway between the date of the previous 
verification and the date of the most recent verification. Corrected 
reports must be submitted to ONRR within 30 calendar days of discovery 
of the error in the reported volumes.

Subpart L--Tribal and Royalty-Free Use of Production

Tribal Use of Gas Production


Sec.  226.142  Use of gas by the Osage Nation and Tribe members.

    (a) Gas from any well must be furnished to any Tribally-owned 
building or enterprise at a rate not to exceed the rate set forth in 
Sec.  226.40, subject to the Superintendent's determination that the 
lease is producing gas in excess of the lessee's requirements for 
operations and that no waste will result. The Osage Nation must furnish 
all labor and materials necessary for connection with the lessee's gas 
system. The Osage Nation uses gas under this section at its own risk.
    (b) Any member of the Osage Nation who resides in Osage County 
outside of an incorporated city is entitled to use a maximum of 400,000 
cubic feet of gas per calendar year for their primary residence at a 
rate not to exceed the rate set forth in Sec.  226.40, subject to the 
Superintendent's determination that the lease is producing gas in 
excess of the lessee's requirements and that no waste will result. The 
Tribe member must furnish all labor and materials necessary for 
connection with the lessee's gas system and must maintain their own 
lines. Tribal members use gas under this section at their own risk.
    (c) The lessee may not stop furnishing gas pursuant to paragraphs 
(a) and (b) of this section without Superintendent's approval. To 
obtain such approval, the lessee must submit a request to the 
Superintendent, in writing, providing justification for terminating the 
Tribe member's use of gas from the lessee's well.


Sec.  226.143  Royalty on gas furnished for Tribal use.

    The lessee must pay royalty on all gas furnished to Tribally owned 
buildings and enterprises and Tribe members in accordance with 
Sec. Sec.  226.39 and 226.40.

[[Page 2492]]

Royalty-Free Use of Lease Production


Sec.  226.144  Production on which no royalty is due.

    To the extent specified in Sec. Sec.  226.145 and 226.146, royalty 
is not due on:
    (a) Oil and gas produced from a lease and used for operations or 
production purposes (including placing the oil and gas in marketable 
condition) on the same lease without being removed therefrom; or
    (b) Oil and gas produced from a unit and used for operations or 
production purposes (including placing the oil and gas in marketable 
condition) on the same unit, under the same cooperative agreement, 
without being removed therefrom.


Sec.  226.145  Uses of production on a lease or unit that do not 
require the Superintendent's prior approval of royalty-free treatment.

    (a) The following uses of oil and gas for operations or production 
purposes do not require the Superintendent's prior approval to be 
royalty-free:
    (1) Use of fuel to generate power or operate combined heat and 
power;
    (2) Use of fuel to power equipment, including artificial lift 
equipment, equipment used for enhanced recovery, drilling rigs, and 
completion and workover equipment;
    (3) Use of gas to actuate pneumatic controllers or operate 
pneumatic pumps at production facilities;
    (4) Use of fuel to heat, separate, or dehydrate production;
    (5) Use of gas as a pilot fuel or as assist gas for a flare, 
combustor, thermal oxidizer, or other control device;
    (6) Use of fuel to compress or treat gas to place it in marketable 
condition;
    (7) Use of oil to clean the well and improve production (e.g., hot 
oil treatments). The lessee must document removal of the oil from the 
tank or pipeline in accordance with Sec.  226.99;
    (8) Use of oil as a circulating medium in drilling operations if 
such use is part of an approved drilling plan;
    (9) Injection of gas for the purpose of conserving gas or 
increasing the recovery of oil or gas if the Superintendent ordered or 
approved such injection; and
    (10) Injection of gas that is cycled in a contained gas-lift 
system.
    (b) The volumes of oil and gas treated as royalty-free under this 
section must not exceed the amount of fuel necessary to perform the 
operation using equipment of appropriate capacity.


Sec.  226.146  Uses of production on a lease or unit that require the 
Superintendent's prior approval of royalty-free treatment.

    (a) The following uses of oil and gas for operations or production 
purposes require the Superintendent's prior approval of royalty-free 
treatment to ensure that accountability is maintained:
    (1) Use of oil or gas the lessee removes from the pipeline at a 
location downstream of the FMP;
    (2) Use of gas that has been removed from the lease or unit for 
treatment or processing because the physical characteristics of the gas 
require it to be treated or processed prior to use, where the gas is 
returned to, and used on, the same lease or unit from which it was 
produced; and
    (3) Any other uses of produced oil and gas for operations and 
production purposes that are not set forth in Sec.  226.145.
    (b) The lessee must submit a request to conduct activities under 
paragraph (a) of this section to the Superintendent, in writing, to 
obtain approval of royalty-free treatment for the volumes of oil and 
gas used. Such request must include the information required by Sec.  
226.151. If the Superintendent approves a request for royalty-free 
treatment under this section, the effective date of such approval will 
be the date the Superintendent received the lessee's request. If the 
Superintendent denies a request for royalty-free treatment under this 
section, the lessee must pay royalties on all volumes utilized to 
conduct activities under paragraph (a) of this section.
    (c) The lessee must measure the volumes of oil and gas used to 
conduct activities under paragraph (a)(1) of this section in accordance 
with subparts J and K, as applicable. The lessee must measure the 
volume of gas returned to the lease or unit following removal under 
paragraph (a)(2) of this section in accordance with subpart K.


Sec.  226.147  Uses of production moved off the lease or unit that do 
not require the Superintendent's prior approval of royalty-free 
treatment.

    Oil and gas moved off the lease or unit may be treated as royalty-
free without the Superintendent's prior approval if the use meets the 
criteria in Sec.  226.145 and:
    (a) The oil or gas is transported from one area of the lease or 
unit to be used at another area of the same lease or unit and no oil or 
gas is added to, or removed from, the pipeline while crossing lands 
that are not part of the lease or unit from which the oil or gas was 
produced; or
    (b) A well is directionally drilled, the wellhead is not located on 
the producing lease or unit, and the oil or gas is being used on the 
same well pad for operations or production purposes for that well.


Sec.  226.148  Uses of production moved off the lease or unit that 
require the Superintendent's prior approval of royalty-free treatment.

    (a) Except as provided in Sec.  226.147(b) and paragraph (b) of 
this section, royalty is owed on all oil and gas used in operations 
conducted off the lease or unit from which it is produced.
    (b) The Superintendent may grant prior approval of royalty-free 
treatment of oil or gas used in operations conducted off the lease or 
unit if the:
    (1) Use is among those listed in Sec. Sec.  226.145(a) or 
226.146(a);
    (2) Equipment or facility in which the operation is conducted is 
located off the lease or unit for engineering, economic, resource 
protection, or physical accessibility reasons; and
    (3) Operations are conducted upstream of the FMP.
    (c) The lessee must submit a request to the Superintendent, in 
writing, to obtain approval of royalty-free treatment of the volumes of 
oil and gas used. Such request must comply with the requirements set 
forth in Sec.  226.151. If the Superintendent approves a request for 
royalty-free treatment under this section, the effective date of such 
approval will be the date the Superintendent received the lessee's 
request. If the Superintendent denies a request for royalty-free 
treatment under this section, the lessee must pay royalties on all 
volumes used.
    (d) If equipment or a facility located on a particular lease treats 
oil or gas produced from the lease as well as oil or gas produced from 
properties that are not unitized with the lease, the lessee may only 
report as royalty-free that portion of the oil or gas used as fuel that 
is properly allocated to the share of production contributed by the 
lease or unit upon which the equipment or facility is located.


Sec.  226.149  Measurement or estimation of royalty-free volumes of oil 
or gas.

    (a) The lessee must measure or estimate the volumes of royalty-free 
gas used upstream of the FMP.
    (b) The lessee must measure the volume of gas that is removed from 
the product stream downstream of the FMP and used royalty-free pursuant 
to Sec. Sec.  226.145 through 226.148.
    (c) The lessee must measure the volume of oil that is used royalty-
free pursuant to Sec. Sec.  226.145 through 226.148. The lessee must 
also document the removal of such oil from the tank or pipeline.
    (d) If the lessee removes oil or gas downstream of the FMP and it 
is used

[[Page 2493]]

royalty-free pursuant to Sec. Sec.  226.145 through 226.148, the lessee 
must notify the Superintendent, in writing, and obtain an approved FMP 
under Sec.  226.86 to measure the production removed for use.
    (e) The lessee must use the best available information when 
estimating gas volumes.
    (f) The lessee must report each of the volumes required to be 
measured or estimated under this subpart to ONRR in accordance with 
Sec. Sec.  226.45 and 226.87.


Sec.  226.150  Ownership of equipment and facilities.

    The lessee is not required to own or lease the equipment or 
facility that uses oil or gas royalty-free under this subpart. The 
lessee is responsible for obtaining required authorizations, measuring 
and reporting production, and all other applicable requirements.


Sec.  226.151  Requesting approval of royalty-free treatment for 
volumes used.

    The lessee must submit a request to the Superintendent, in writing, 
for approval of royalty-free use of production under this subpart. Such 
requests must include the following information:
    (a) A complete description of the operation to be conducted, 
including the location of all equipment and facilities involved in the 
operation and the location of the FMP;
    (b) The volumes of oil and gas the lessee expects will be used to 
conduct the operation and the method used to measure or estimate such 
volumes;
    (c) If the volume of gas expected to be used is estimated, the 
basis for the estimate (e.g., equipment manufacturer's published 
consumption or usage rates); and
    (d) The proposed disposition of the oil and gas used (e.g., whether 
gas used would be consumed as fuel, vented through use of a gas-
activated pneumatic controller, returned to the reservoir, or used in 
some other way).

Subpart M--Venting and Flaring


Sec.  226.152  General requirements.

    (a) No venting or flaring of gas is permitted without the 
Superintendent's prior approval, except as defined in Sec.  226.156.
    (b) The lessee must notify the Superintendent by email or facsimile 
at least three business days prior to conducting approved venting or 
flaring operations.
    (c) For purposes of this subpart, all flares or combustible devices 
must be equipped with an automatic ignition system.


Sec.  226.153  Gas-well gas.

    Gas-well gas may not be vented or flared except where it is 
unavoidably lost under Sec.  226.91(c).


Sec.  226.154  Oil-well gas.

    Oil-well gas may be vented or flared in accordance with Sec. Sec.  
226.155, 226.156, and 226.157.


Sec.  226.155  Limitations on venting gas.

    (a) The lessee must flare, rather than vent, any gas that is not 
captured, except when:
    (1) Flaring the gas is technically infeasible, such as when the gas 
is not readily combustible, or the volumes are too small to flare;
    (2) There are emergency conditions, as defined in Sec.  226.156(d), 
and the loss of gas is uncontrollable, or venting is necessary for 
safety reasons;
    (3) Gas is vented through normal operations of a natural gas-
activated pneumatic controller or pump;
    (4) Gas vapor is vented from a storage tank or other low-pressure 
production vessel, unless the Superintendent determined that recovery 
of the gas vapors is warranted;
    (5) Gas is vented during downhole well maintenance or liquids 
unloading activities;
    (6) Venting is necessary to allow the performance of non-routine 
facility and pipeline maintenance, such as when the lessee must 
occasionally blow-down and depressurize equipment to perform 
maintenance or repairs; or
    (7) A release of gas is unavoidable under Sec.  226.91(c) and 
flaring is prohibited by Federal law.
    (b) Venting of gas that has an H2S content of 100 ppm or 
greater is prohibited.


Sec.  225.156  Authorized venting and flaring of gas.

    (a) Initial production testing. Gas flared during the initial 
production test of each completed interval in a well is royalty-free 
until one of the following occurs:
    (1) The lessee obtains adequate reservoir information;
    (2) It has been 30 calendar days since the beginning of the 
production test, unless the Superintendent approves a longer test 
period; or
    (3) The lessee has flared 50 MMcf of gas.
    (b) Subsequent well tests. Gas flared during well tests after the 
initial production test is royalty-free for a period not to exceed 24 
hours unless the Superintendent approves or requires a longer test 
period.
    (c) Downhole well maintenance and liquids unloading. Gas vented 
during downhole well maintenance and well purging is royalty-free for a 
period not to exceed 24 hours per event, provided that the requirements 
in paragraphs (c)(1) through (3) of this section are met. Gas vented 
from a plunger lift system or automated well control system is royalty-
free, provided that the requirements in paragraphs (c)(1) and (2) of 
this section are met. For purposes of this section, ``well purging'' 
means blowing accumulated liquids out of a wellbore using reservoir gas 
pressure, whether manually or by an automatic control system that 
relies on real-time pressure or flow, times, or other well data, where 
gas is vented to the atmosphere. The term ``well purging'' does not 
apply to wells equipped with plunger lift systems.
    (1) The lessee must minimize the loss of gas associated with 
downhole well maintenance and liquids unloading consistent with safe 
operations.
    (2) For wells equipped with a plunger lift system or automated well 
control system, minimizing the loss of gas under paragraph (c)(1) of 
this section includes optimizing operation of the system to minimize 
gas losses to the maximum extent possible, consistent with removing 
liquids that would inhibit proper function of the well.
    (3) For any liquids unloading by manual well purging, the lessee 
must ensure that the person conducting the well purging remains on-site 
throughout the operation so he can end the operation as soon as 
practical, thereby minimizing venting to the atmosphere to the maximum 
extent possible.
    (d) Emergencies. (1) Gas vented or flared during an emergency is 
royalty-free for a period not to exceed 24 hours, unless the 
Superintendent determines that emergency conditions exist that 
necessitate venting or flaring for a longer period.
    (2) For purposes of this subpart, an ``emergency'' is a temporary, 
infrequent, and unavoidable situation in which the loss of oil or gas 
is uncontrollable or necessary to avoid the risk of immediate and 
substantial adverse impacts on public health, safety, or the 
environment and that is not the result of lessee negligence or non-
compliance.
    (3) The following do not constitute emergencies for the purpose of 
royalty assessment:
    (i) Failure to install appropriate equipment with sufficient 
capacity to accommodate the production conditions;
    (ii) Failure to limit production when the production rate exceeds 
the capacity of the necessary equipment, pipeline, or gas plant or 
exceeds sales contract volumes of oil or gas;

[[Page 2494]]

    (iii) Scheduled maintenance;
    (iv) Situations caused by lessee negligence or non-compliance, 
including equipment failures; and
    (v) Situations on a lease or unit that has experienced three or 
more emergencies within the past 30 days unless the Superintendent 
determines that the occurrence of such emergencies within the 30-day 
period could not have been anticipated and was beyond the lessee's 
control.
    (4) The lessee must notify the Superintendent of all emergencies in 
writing, by email or facsimile, immediately upon discovery, but not 
later than the next calendar day.
    (5) The lessee must estimate and report the volumes vented or 
flared beyond the timeframe specified in paragraph (c)(1) of this 
section within 45 calendar days of the date the emergency started.


Sec.  226.157  Measurement and reporting of volumes of gas vented or 
flared.

    (a) The lessee must estimate or measure all volumes of oil and gas 
avoidably and unavoidably lost from wells, facilities, and equipment on 
a lease or unit and report such volumes to ONRR in accordance with 
Sec. Sec.  226.45 and 226.87.
    (b) The lessee may:
    (1) Estimate the volume of gas vented or flared based on the 
results of a regularly performed GOR test and measured values for the 
volumes of oil production and gas sales to allow the Superintendent to 
independently verify the volume, rate, and heating value of the flared 
gas; or
    (2) Measure the volume of the flared gas.
    (c) The Superintendent may require the installation of additional 
measurement equipment whenever it is determined that the existing 
methods are inadequate to meet the purposes of this subpart.
    (d) The lessee may combine gas from multiple leases or units for 
the purpose of venting or flaring at a common point but must allocate 
the quantities of the vented or flared gas to each lease or unit using 
a method the Superintendent approves.

Subpart N--Assessments and Penalties

Lease Management Assessments and Civil Penalties


Sec.  226.158  Remedies for violations of lease or permit terms and 
conditions, regulations, orders, and notices.

    Violation of, or non-compliance with, the terms and conditions of 
any lease or permit, the regulations in this part, or orders and 
notices the Superintendent issues, may result in:
    (a) Assessments;
    (b) Civil penalties for each day such violation continues;
    (c) Shut-in action; and
    (d) Cancellation of the lease or permit and bond forfeiture.


Sec.  226.159  Immediate assessments for violations of certain 
operating regulations.

    The Superintendent will issue immediate assessments upon discovery 
of the violations identified in Table 1. Assessments will be issued in 
the specified amounts per violation, per inspection. Imposition of 
these assessments does not preclude other appropriate enforcement 
action and civil penalties.

Table 1 to Sec.   226.159--Violations Subject to an Immediate Assessment
------------------------------------------------------------------------
                                                            Assessment
                        Violation                           amount per
                                                           violation ($)
------------------------------------------------------------------------
1. Failure to post signs and install flags and wind                 $250
 indicators as required by Sec.   226.70(d)(4) through
 (8)....................................................
2. Failure to properly identify wells, tanks, and                    250
 facilities as required by Sec.   226.75................
3. Failure to seal an appropriate valve on an oil                  1,000
 storage tank as required by Sec.   226.94..............
4. Failure to seal an appropriate valve or component on            1,000
 an oil metering system as required by Sec.   226.95....
5. Failure to properly measure oil before removal from             1,000
 storage for use on a different lease or unit as
 required by Sec.   226.99(b)...........................
6. Failure to retain records necessary to determine the            1,000
 quality and quantity of production as required by Sec.
  226.88................................................
7. Missing or non-functioning FMP LACT system components           1,000
 as required by Sec.   226.110..........................
8. Missing or non-functioning FMP CMS components as                1,000
 required by Sec.   226.111.............................
9. Failure to meet the proving frequency requirements              1,000
 for an FMP as set forth in Sec.   226.113..............
10. Failure to obtain the Superintendent's approval                1,000
 prior to using any oil measurement method other than
 tank gauging, LACT system, or CMS at an FMP as required
 by Sec.   226.115......................................
11. Failure to conduct new FMP orifice plate inspections           1,000
 as required by Sec.   226.121(c).......................
12. Failure to conduct routine FMP orifice plate                   1,000
 inspections as required by Sec.   226.121(d)...........
13. Failure to conduct basic meter-tube inspections as             1,000
 required by Sec.   226.121(g)..........................
14. Failure to conduct detailed meter-tube inspections             1,000
 as required by Sec.   226.121(h).......................
15. Failure to conduct an initial mechanical recorder              1,000
 verification as required by Sec.   226.123(a)..........
16. Failure to conduct routine mechanical recorder                 1,000
 verifications as required by Sec.   226.123(b).........
17. Failure to conduct an initial EGM system                       1,000
 verification as a required by Sec.   226.126(a)........
18. Failure to conduct routine EGM system verifications            1,000
 as required by Sec.   226.126(b).......................
19. Failure to take spot samples for FMPs as required by           1,000
 Sec.   226.133.........................................
20. Failure to construct and maintain pits as required             2,500
 by Sec.   226.77.......................................
21. Failure to install and maintain H2S detection                  2,500
 equipment as required by Sec.   226.70(d)(2)...........
------------------------------------------------------------------------

Sec.  226.160  Other assessments.

    If a lessee fails to commence or perform an operation within five 
calendar days after the Superintendent orders such operation in 
writing, or such other time as may be specified in the order, the 
Superintendent may enter upon the lease and perform the operation, or 
have a third-party perform the operation, at the sole risk and expense 
of the lessee. The Superintendent will issue an assessment for the 
actual cost of performance plus an additional 25 percent of such amount 
for all operations performed by or through the Superintendent due to 
the lessee's non-compliance.


Sec.  226.161  Civil penalties with a period to correct.

    (a) If a lessee or permittee violates the terms and conditions of 
the lease or permit, the regulations in this part, or

[[Page 2495]]

orders and notices the Superintendent issues, the Superintendent may 
issue a NONC informing the lessee or permittee of the violation and 
specifying what actions, if any, must be taken to correct the non-
compliance and avoid the assessment of civil penalties and cancellation 
of the lease or permit. Upon completion of the required corrective 
actions, the lessee must submit a Self-Certification for Correction of 
Lease Violations form to the Superintendent.
    (b) If the violation is corrected within 20 calendar days of the 
NONC, or such longer period for correction specified in the NONC, the 
Superintendent will not assess a civil penalty or cancel the lease or 
permit but will consider the violations part of the lessee's or 
permittee's history of non-compliance for future penalty assessments.
    (c) If the violation is not corrected within 20 calendar days of 
the NONC, or such longer period for correction specified in the NONC, 
the lessee or permittee will be liable for a civil penalty of up to 
$1,198 per violation for each day such violation continues, commencing 
with the date of the NONC.
    (d) If the violation is not corrected within 40 calendar days of 
the notice, or such longer period for correction specified in the NONC, 
the lessee or permittee will be liable for a civil penalty of up to 
$11,995 per violation for each day such violation continues, commencing 
with the date of the NONC.
    (e) If the Superintendent agrees to an extension of the time to 
take corrective action exceeding 20 calendar days, the date of the NONC 
will be deemed to be 20 calendar days prior to the end of the extended 
period for the purpose of civil penalty calculation.
    (f) Any amount imposed and paid as assessments under Sec.  226.159 
will be deducted from penalties under this section.


Sec.  226.162  Civil penalties without a period to correct.

    (a) The Superintendent may assess civil penalties for the 
violations identified in paragraphs (b) and (c) of this section without 
prior notice or an opportunity to correct the violation. The 
Superintendent will inform lessees, permittees, and other persons of 
violations resulting in civil penalties without a period to correct by 
issuing an ILCP identifying the violation and the amount of the civil 
penalty. For purposes of this section, civil penalties begin to accrue 
on the day the violation is committed.
    (b) Any person is liable for a civil penalty of up to $23,989 per 
violation for each day such violation continues, if such person:
    (1) Fails or refuses to permit the Superintendent's lawful entry or 
inspection pursuant to Sec.  226.60; or
    (2) Knowingly or willfully commences drilling, recompletion, or 
reentry operations, or causes surface disturbance preliminary thereto, 
without the Superintendent's prior approval in accordance with Sec.  
226.61.
    (c) Any person is liable for a civil penalty of up to $59,973 per 
violation for each day such violation continues, if such person:
    (1) Knowingly or willfully prepares, maintains, or submits false, 
inaccurate, or misleading reports, notices, affidavits, records, data, 
or other documents and information required by this part;
    (2) Knowingly or willfully removes, transports, uses, or diverts 
any oil or gas from any lease or unit without valid legal authority to 
do so;
    (3) Tampers with or bypasses any measurement device, component of a 
measurement device, or the measurement process;
    (4) Purchases, accepts, sells, transports, or conveys oil or gas to 
any other person knowing or having reason to know that such oil or gas 
was stolen or unlawfully removed or diverted from a lease or unit of 
the Osage Mineral Estate.


Sec.  226.163  Penalty amount.

    (a) The Superintendent will determine the amount of the penalty to 
assess by considering:
    (1) The severity of the violation; and
    (2) The lessee's or permittee's history of non-compliance.
    (b) The Superintendent may compromise or reduce a civil penalty 
assessed under this subpart.


Sec.  226.164  Shut-in actions.

    (a) The Superintendent may take immediate shut-in action, without 
notice, when necessary for compliance; when operations are commenced or 
conducted without the required approval; or where continued operations 
could result in immediate adverse impacts on public health and safety, 
natural resources, the environment, production accountability, or 
royalty income.
    (b) The Superintendent may take shut-in action in situations other 
than those identified in paragraph (a) of this section only after 
providing written notice to the lessee or permittee.


Sec.  226.165  Lease or permit cancellation.

    (a) The Superintendent may issue a Notice of Cancellation for a 
lease or permit if a lessee or permittee:
    (1) Is determined to have obtained the lease or permit by 
collusion, fraud, or misrepresentation;
    (2) Fails to comply with the terms and conditions of the lease or 
permit, the regulations in this part, or other applicable laws;
    (3) Fails to timely comply with, or respond to, an order or notice 
the Superintendent or ONRR issues;
    (4) Fails to timely correct a violation under Sec.  226.161;
    (5) Fails to pay civil penalties in full on or before the date the 
Superintendent or ONRR specifies;
    (6) Knowingly and willfully commits a violation that results in 
immediate adverse impacts on public health and safety, natural 
resources, or the environment, production accountability, or royalty 
income; or
    (7) Has a history of non-compliance.
    (b) The Notice of Cancellation will inform the lessee or permittee 
of the violation, set forth the reasons why cancellation is warranted, 
and specify what actions, if any, may be taken to avoid cancellation of 
the lease or permit and bond forfeiture.
    (c) Cancellation of a lease or permit does not relieve the lessee 
or permittee of any continuing obligations under the lease, permit, or 
regulations in this part.
    (d) Upon cancellation of a lease, the Osage Minerals Council may 
take immediate possession of the leased lands and all permanent 
improvements and surface equipment necessary for operation of the 
lease.


Sec.  226.166  Payment of assessments and civil penalties.

    (a) The lessee or permittee must remit payment for civil penalties 
and immediate assessments set forth in this subpart within 10 business 
days of receipt of the notice of collection from the Superintendent by 
certified mail unless a different date is specified therein.
    (b) Failure to timely pay civil penalties will result in the 
assessment of an interest charge on all unpaid or underpaid penalty and 
assessment amounts. Interest will be charged at the IRS underpayment 
rate pursuant to 26 U.S.C. 6621(a)(2), or such other rate as the 
Superintendent may prescribe. The IRS underpayment rate is posted 
quarterly and is available online at https://www.irs.gov. Interest will 
only be charged on the amount of the payment not received and for the 
number of days the payment is late.
    (c) Payments made pursuant to subpart N of this part do not relieve 
the lessee or permittee of compliance with the terms and conditions of 
the lease or permit or the regulations in this part,

[[Page 2496]]

nor do they relieve the lessee or permittee of liability for waste, 
surface damages, or any other damages that may be occasioned. A waiver, 
compromise, or reduction of any penalty must not be construed as 
precluding or limiting the imposition of penalties for any other 
violations or acts of non-compliance at that time or any other time.

Royalty Management Assessments and Civil Penalties


Sec.  226.167  Remedies for violations of lease or permit terms and 
conditions, regulations, orders, and notices.

    Violation of the terms or conditions of a lease, permit, or the 
regulations in this part relating to royalty payment and reporting, 
production reporting, or non-compliance with any orders ONRR issues, 
may result in:
    (a) Assessments;
    (b) Civil penalties for each day such violation or non-compliance 
continues;
    (c) Shut-in or cancellation of the lease and bond forfeiture under 
Sec. Sec.  226.164 and 226.165; and
    (d) The transfer of delinquent debts to the U.S. Department of 
Treasury for collection.


Sec.  226.168  Assessments for incorrect or late reports and failure to 
report.

    (a) ONRR may issue assessments of up to $10 per day for each report 
it does not receive by the designated due date and for each report 
submitted that is incorrectly completed.
    (b) ONRR will periodically establish the amount of the assessments 
imposed under paragraph (a) of this section based on its experience 
with costs and improper reporting. ONRR will publish notice of the 
assessment amount in the Federal Register.


Sec.  226.169  Assessments for failure to submit payment amount 
indicated on a form or bill document or to provide adequate 
information.

    (a) ONRR may issue an assessment of up to $250 when the amount of a 
payment a reporter or payor submits is not equivalent in amount to the 
total of individual line items on the associated form or bill document, 
unless ONRR authorized the difference in amount.
    (b) ONRR may issue an assessment of up to $250 for each payment a 
reporter or payor submits that cannot be automatically applied to the 
associated form or bill document because the reporter or payor 
submitted inadequate or erroneous information.
    (c) For purposes of this section, the term ``applicable forms'' 
include Form ONRR-2014, Form ONRR-4054, and any other forms ONRR 
requires under this part.
    (d) For purposes of this section, the term ``bill document'' means 
any invoice that ONRR issues for assessments, late-payment interest 
charges, or other amounts owed. A payment document is defined as a 
check or wire transfer message.
    (e) For purposes of this section, ``inadequate or erroneous 
information'' is defined as an:
    (1) Absent or incorrect payor-assigned document number the reporter 
or payor is required to identify in Block 4 on Form ONRR-2014 (document 
4 number), or the reuse of the same incorrect payor-assigned document 4 
number in a subsequent reporting period;
    (2) Absent or incorrect bill document invoice number (to include 
the three-character alpha prefix and the nine-digit number) or the 
payor-assigned document 4 number the reporter or payor is required to 
be identify on the associated payment document, or reuse of the same 
incorrect payor-assigned document 4 number in a subsequent reporting 
period;
    (3) Absent or incorrect name of the administering BIA agency or 
office or the Tribe name on payment documents remitted. If the payment 
is made by EFT, the reporter or payor must identify the Tribe on the 
EFT message by a pre-established five-digit code;
    (4) Absent or incorrect ONRR-assigned payor code on a payment 
document; or
    (5) Absent or incorrect identification on a payment document.
    (f) ONRR will periodically establish the amount of the assessment 
to be imposed under paragraphs (a) and (b) of this section. The amount 
of the assessment for each violation will be based on ONRR's experience 
with costs and improper reporting. ONRR will publish notice of the 
assessment amount in the Federal Register.


Sec.  226.170  Civil penalties with a period to correct.

    (a) If a reporter or payor violates the terms and conditions of the 
lease, the regulations in this part or any order relating to royalty 
and production reporting and payment requirements, ONRR may issue a 
NONC informing the reporter or payor of the violation and specifying 
what actions, if any, must be taken to correct the violation and avoid 
the assessment of civil penalties.
    (b) If the violation is corrected within 20 calendar days of the 
NONC, or such longer period for correction specified in the NONC, ONRR 
will not assess a civil penalty or request that the Superintendent 
shut-in or cancel the lease or permit but will consider the violations 
part of the reporter's or payor's history of non-compliance for future 
penalty assessments.
    (c) If the violation is not corrected within 20 calendar days after 
the date on which the NONC is served, or within 20 days following the 
expiration of any longer period for correction specified in the NONC, 
ONRR may issue an FCCP.
    (1) The FCCP will state the amount of the penalty. The penalty 
will:
    (i) Begin to run on the day the NONC is served; and
    (ii) Continue to accrue for each violation identified in the NONC 
until it is corrected.
    (2) The penalty may be up to $1,368 per day for each violation 
identified in the NONC that has not been corrected.
    (d) If the violation is not corrected within 40 calendar days from 
the date the NONC is served, or within 20 calendar days following the 
expiration of any longer correction period specified in the NONC, the 
reporter or payor will be liable for a penalty of up to $13,693 per day 
for each day the violation identified in the NONC that has not been 
corrected. The increased penalty will:
    (1) Begin to run on the 40th day after the day the NONC was served 
or on the 20th day after the expiration of any longer correction period 
in the NONC; and
    (2) Continue to accrue for each violation identified in the NONC 
until it is corrected.


Sec.  226.171  Civil penalties without a period to correct.

    (a) ONRR may assess a penalty for a violation identified in 
paragraphs (b) and (c) of this section without prior notice or an 
opportunity to correct the violation. ONRR will inform reporters and 
payors of violations without a period to correct by issuing an ILCP 
explaining the violation and the amount of the civil penalty. The 
penalty will begin to run on the day the violation is committed.
    (b) A reporter or payor is liable for a civil penalty of up to 
$27,384 per violation for each day the violation continues if they:
    (1) Fail or refuse to permit lawful entry, inspection, or audit, 
including refusal to keep, maintain, or produce documents; or
    (2) Knowingly or willfully fail to make any royalty payment by the 
date specified in the lease, regulations in this part, or any 
applicable order.
    (c) A reporter or payor is liable for a civil penalty up to $68,462 
per violation for each day the violation continues if they knowingly or 
willfully prepare, maintain, or submit false, inaccurate, or

[[Page 2497]]

misleading reports, notices, affidavits, records, data, or other 
information to ONRR.
    (d) ONRR may use any information as evidence that a reporter or 
payor knowingly or willfully committed a violation including, but not 
limited to:
    (1) Any acts, or failures to act, by a reporter's or payor's 
employee or agent;
    (2) An email indicating the reporter's or payor's concurrence with 
an issue;
    (3) An order that the reporter or payor failed to appeal an order, 
NONC, or ILCP for which no further appeal is available; and
    (4) Any oral or written communication that identifies a violation 
that the reporter or payor:
    (i) Acknowledges as true and fails to correct;
    (ii) Fails to appeal, or cannot further appeal, and fails to 
correct; or
    (iii) Corrects, but the reporter or payor subsequently commits the 
same violation.


Sec.  226.172  Penalty amount.

    (a) ONRR will determine the amount of the penalty to assess by 
considering the:
    (1) Severity of the violation;
    (2) History of non-compliance; and
    (3) Size of the reporter's or payor's business. To determine 
business size, ONRR may consider the number of employees in the 
reporter's or payor's company, parent company or companies, and any 
subsidiaries or contractors.
    (b) ONRR will not consider the royalty consequence of the 
underlying violation when determining the amount of the civil penalty 
for a violation under Sec. Sec.  226.170, 226.171(b)(1), and 
226.171(c).
    (c) FCCP and ILCP assessment matrices and adjustments thereto are 
posted on ONRR's website.
    (d) Penalties ONRR assesses under this subpart are in addition to 
interest owed on any underlying payments or unpaid debts and are 
supplemental to, not in derogation of, any other penalties or 
assessments for non-compliance set forth in this part or other 
applicable laws and regulations.
    (e) ONRR may compromise or reduce a civil penalty assessed under 
this subpart.


Sec.  226.173  Payment of assessments and civil penalties.

    (a) The reporter or payor must remit payment for the civil 
penalties and assessments set forth in Sec. Sec.  226.168 through 
226.171 on or before the due date identified in the bill accompanying 
the FCCP or ILCP.
    (b) Failure to timely pay civil penalties and assessments will 
result in the reporter or payor owing late-payment interest on all 
unpaid or underpaid penalty and assessment amounts. Interest will be 
charged in accordance with Sec.  226.166(b) beginning on the day the 
payment was due and continuing until all debts are paid in full.


Sec.  226.174  Collection of unpaid civil penalties.

    If a reporter or payor fails to pay a civil penalty amount on or 
before the date it is due, ONRR may use all available means to collect 
the penalty including, but not limited to:
    (a) For an amount owed by a lessee, requiring the lease surety to 
pay the penalty;
    (b) Deducting the amount of the penalty from any sum the United 
States may owe the reporter or payor; or
    (c) Referring the debt to the U.S. Department of the Treasury 
(Treasury) for collection in accordance with Sec.  226.175.


Sec.  226.175  Debt collection and administrative offset.

    (a) ONRR will transfer any past due, legally enforceable non-tax 
debt to Treasury within 180 days from the date the debt becomes past 
due so that Treasury may take appropriate action to collect the debt or 
terminate the collection action 26 U.S.C. 6402(d)(1)-(2); 31 U.S.C. 
3711, 3716, and 3720A; Federal Claims Collection Standards (31 CFR 
parts 900 through 904); and 31 CFR 285.2 and 285.5.
    (b) If ONRR determines that a person owes, or may owe, a legally 
enforceable debt to ONRR, it will send a written notice to the debtor 
advising that ONRR intends to refer the debt to Treasury. The notice 
will inform the debtor of the:
    (1) Amount, nature, and basis of the debt;
    (2) Methods of offset that ONRR or Treasury may use;
    (3) Opportunity to inspect and copy Agency records related to the 
debt;
    (4) Opportunity to enter into a written agreement with ONRR to 
repay the debt;
    (5) ONRR's policy regarding interest and administrative costs, 
including a statement that ONRR will make such assessments unless it 
determines otherwise under the criteria of the Federal Claims 
Collection Standards and this part;
    (6) Date by which payment must be remitted to avoid additional late 
charges and enforced collection; and
    (7) Name, address, and phone number of an ONRR representative who 
is available to discuss the debt.
    (c) Debtors that receive a notice issued pursuant to paragraph (b) 
of this section may not appeal unless the notice specifically provides 
for such opportunity because the debtor did not previously receive a 
notice of the order, decision on appeal, or any other notice or 
decision that is the basis of the debt that ONRR intends to refer to 
Treasury and for which the debtor may be liable in whole or in part 
under applicable law. Debtors may not dispute matters related to 
delinquent debts that were the subject of a final order or appeal 
decision of which they were the recipient or a party thereto and that 
are the basis of the delinquent debt. The requirements under this 
paragraph apply whether the debtor appealed the order, demand, NONC, or 
assessment.
    (d) ONRR will issue an initial assessment of $436 for 
administrative costs incurred because of a debtor's failure to pay a 
delinquent debt. ONRR will publish notice of any increases in 
administrative costs in the Federal Register. ONRR may also assess an 
additional $436 for administrative costs that continue to accrue during 
any appeal process if:
    (1) The notice issued under paragraph (b) of this section grants 
the right to appeal and the debtor exercises that right; and
    (2) The appeal is denied and ONRR refers the delinquent debt to 
Treasury.
    (e) ONRR will apply a partial or installment payment made on a 
delinquent debt sent to Treasury in the following order: outstanding 
penalty assessments, administrative costs, accrued interest, and 
outstanding debt principal.
    (f) The Director of ONRR may waive collection of all or part of the 
administrative costs under paragraph (d) of this section if they 
determine that collection of this charge would be against equity and 
good conscience or the Federal Government's best interest. The 
Director's decision to collect or waive administrative costs is the 
final decision for the Department and is not subject to administrative 
review.
    (g) The Director of ONRR may recommend that the Superintendent 
revoke a debtor's ability to engage in the leasing of any trust or 
restricted lands or the granting of easements, permits, or rights-of-
way if the debtor inexcusably or willfully fails to pay a debt. Any 
such recommendation will remain in effect until such time as the debt 
is paid in full or otherwise resolved to ONRR's satisfaction.
    (h) ONRR may refer any past due, legally enforceable debt to 
Treasury to collect through administrative offset or tax refund offset 
at least 60 calendar days after it issues notice under paragraph (b) of 
this section if the debt

[[Page 2498]]

is at least $250 or such other base amount as may be established by 
Treasury.
    (i) ONRR may refer debts reduced to judgment to Treasury for tax 
refund offset at any time.

Criminal Penalties


Sec.  226.176  Penalties for filing fraudulent reports.

    Any person who knowingly and willfully files fraudulent reports or 
information under the regulations in this part is subject to criminal 
penalties under 18 U.S.C. 1001.

Subpart O--Appeals

Appeals of BIA Decisions


Sec.  226.177  Procedure for filing an administrative appeal of a 
decision, order, or notice of the Superintendent.

    (a) Any party adversely affected by a decision, order, or notice 
the Superintendent issues by virtue of the regulations in this part may 
appeal pursuant to 25 CFR part 2.
    (b) If an appeal is not timely filed with the Regional Director 
under 25 CFR part 2 and subsequently with the IBIA under 43 CFR part 4, 
subpart D (where required):
    (1) The subject decision, order, or notice will be final for the 
Department; and
    (2) The affected party will be barred from contesting the validity 
or merits of the decision, order, or notice in subsequent 
administrative or judicial proceedings due to failure to exhaust 
administrative remedies.

Appeals of ONRR Decisions


Sec.  226.178  Procedures for filing and administrative appeal of an 
order from ONRR.

    (a) Any party adversely affected by an order ONRR issues by virtue 
of the regulations in this part may appeal to the Director of ONRR as 
set forth in this section.
    (b) For purposes of this section, the term ``order'' means any 
document ONRR issues that contains language mandating or directing the 
recipient to report, compute, or pay royalties or other obligations; 
report production; or provide any other information.
    (1) An order includes, but is not limited to:
    (i) An Order to Pay or Order to Perform a Restructured Accounting;
    (ii) A decision from ONRR denying a lessee's, reporter's, or 
payor's written request and that imposes an obligation on the lessee, 
reporter, or payor (a denial); and
    (iii) A NONC, FCCP, or ILCP.
    (2) An order does not include:
    (i) A non-binding request, information, or guidance, such as a 
policy determination or guidance on how to report or pay, including a 
valuation determination, unless it contains language indicating that an 
action is mandatory or expressly orders the recipient(s) to take a 
certain action;
    (ii) A subpoena;
    (iii) An order that ONRR issues to a refiner or other person 
involved in disposition of royalty taken in-kind;
    (iv) A ``Dear Lessee,'' ``Dear Payor,'' or ``Dear Reporter'' 
letter, unless it explicitly includes the right to appeal; or
    (v) Any other correspondence from ONRR that does not include the 
right to appeal.
    (c) A lessee or designee may appeal an order to the Director of 
ONRR by filing a Notice of Appeal in the office of the official that 
issued the order within 30 calendar days from the date the order was 
received. If a designee is filing an appeal, they must concurrently 
serve the Notice of Appeal on all lessees for the lease(s) identified 
in the order by certified mail--return receipt requested. Within the 
same 30-day period, the lessee or designee must file a Statement of 
Reasons setting forth any factual and legal arguments justifying 
reversal or modification of the order. No extension of time will be 
granted for filing the Notice of Appeal.
    (d) A lessee may join an appeal filed by a designee within 30 
calendar days from the date the lessee receives the Notice of Appeal by 
filing a Notice of Joinder with the office of the official that issued 
the order. If a lessee joins an appeal, they are deemed to appeal the 
order jointly with the designee, but the designee must fulfill all 
requirements imposed on appellants under this section and 43 CFR part 
4, subpart E. Lessees may not file pleadings separately from the 
designee.
    (1) If a lessee does not appeal, or join the designee's appeal, the 
designee's actions with respect to the appeal and any decisions therein 
are binding on the lessee.
    (2) If a designee decides to discontinue participation in an 
appeal, they must serve written notice at least 30 calendar days before 
the next pleading is due. The notice must be served on:
    (i) All lessees who joined the appeal under this section;
    (ii) The office or officer with whom subsequent pleadings must be 
filed; and
    (iii) All other parties to the appeal.
    (e) Any party adversely affected by a decision the Director of ONRR 
issues under this section may appeal the decision to the IBLA pursuant 
to 43 CFR part 4, subpart E.
    (f) If an order is neither paid, nor appealed to the Director of 
ONRR under this section and, subsequently, to the IBLA under 43 CFR 
part 4, subpart E:
    (i) The order is the final decision of the Department; and
    (ii) The affected party will be barred from contesting the validity 
or merits of the order in subsequent administrative or judicial 
proceedings, including enforcement proceedings.


Sec.  226.179  Suspension of compliance with an ONRR order.

    (a) For purposes of this subpart, ``ONRR-specified surety 
instrument'' means an ONRR-specified administrative appeal bond, an 
ONRR-specified irrevocable letter of credit, or a financial institution 
book-entry certificate of deposit.
    (b) Subject to paragraph (d) of this section, if an affected party 
appeals an order regarding the payment or reporting of royalties and 
other payments due from leases of the Osage Mineral Estate:
    (1) If the amount under appeal is less than $1,000, or does not 
require payment, the appellant's obligation to comply with the order is 
suspended while the appeal is pending. ONRR will use the performance 
bond posted with the BIA as collateral for the obligation.
    (2) If the amount under appeal is $1,000 of more, ONRR will suspend 
the appellant's obligation to comply with the order if they submit an 
ONRR-specified surety instrument under this subpart within 60 calendar 
days of the date they receive the order or Notice of Order.
    (c) Nothing in this subpart prohibits an appellant from paying any 
demanded amount or otherwise complying with any other requirement 
pending resolution of their appeal. Voluntarily paying any demanded 
amount or otherwise complying with any other requirement when 
suspension of an order is available under the regulations does not 
create a final agency action subject to judicial review under 5 U.S.C. 
704.
    (d) Regardless of the amount under appeal, ONRR may inform an 
appellant that it will not suspend their obligation to comply with the 
order under paragraph (a) of this section because suspension would harm 
the interests of the United States or Osage Nation.


Sec.  226.180  Requirements for posting a bond or other surety on 
behalf of an appellant.

    Any person, including a designee, payor, or affiliate, may post a 
bond or

[[Page 2499]]

surety instrument under this subpart on behalf of an appellant. If you 
assume an appellant's responsibility to post a bond or other surety 
instrument, you:
    (a) Must notify ONRR in writing that you are assuming the 
appellant's responsibility under this subpart;
    (b) May not assert that you are not otherwise liable for royalties 
or other payments under the lease, or any other theory, as a defense if 
ONRR collects your bond or other surety instrument; and
    (c) May end your voluntarily assumed responsibility for posting a 
bond or other surety instrument only after the appellant pays or posts 
a bond or other surety instrument.


Sec.  226.181  Suspension of the obligation to comply with an ONRR 
order due to judicial review in federal court.

    (a) If an appellant seeks judicial review of an IBLA decision or 
another final action of the Department of the Interior regarding an 
ONRR order, ONRR will suspend the appellant's obligation to comply with 
that order pending judicial review if they continue to meet the 
requirements of this subpart.
    (b) Notwithstanding paragraph (a) of this section, ONRR may decide 
that it will not suspend an appellant's obligation to comply with an 
order. ONRR will notify the appellant in writing of such decision and 
the reasons for it.


Sec.  226.182  ONRR's collection of bonds and other surety instruments.

    (a) This section applies to you if you maintain a bond or an ONRR-
specified surety instrument on your own behalf or on another person's 
behalf for an appeal of an order under this subpart.
    (b) ONRR may initiate collection of your bond or other surety 
instrument if:
    (1) The Director of ONRR decides the appeal adversely to you and 
you do not pay the amount due or appeal the decision further to the 
IBLA under 43 CFR part 4, subpart E;
    (2) The IBLA, Director of the Office of Hearings and Appeals, an 
Assistant Secretary, or the Secretary decides the appeal adversely to 
you and you do not pay the amount due or pursue judicial review within 
90 calendar days of the decision;
    (3) A court of competent jurisdiction issues a final non-appealable 
decision adverse to you and you do not pay the amount due within 30 
calendar days of the decision;
    (4) You do not increase the amount of your bond or other surety 
instrument as required under Sec.  226.185(c), or otherwise fail to 
maintain an adequate surety instrument in effect, and you do not pay 
the amount due under the ONRR order within 30 calendar days of receipt 
of the notice from ONRR under Sec.  226.185(c); or
    (5) The obligation to comply with an order or decision is not 
suspended and you do not pay the amount required under the order or 
decision.


Sec.  226.183  ONRR bond-approving officer's determination of surety 
amount not subject to appeal.

    Any decision regarding the amount of the surety due under this 
subpart is final and not subject to appeal.


Sec.  226.184  Standards for ONRR-specified surety instruments.

    (a) An ONRR-specified surety instrument must be in a form 
identified in ONRR's instructions. ONRR will provide written 
information and standards forms for ONRR-specified surety instrument 
requirements.
    (b) ONRR will use a bank-rating service to determine whether a 
financial institution has an acceptable rating to provide a surety 
instrument adequate to indemnify the lessor from loss or damage.
    (1) Administrative appeal bonds must be issued by a qualified 
surety company that Treasury approved.
    (2) Irrevocable letters of credit or certificates of deposit must 
be from a financial institution acceptable to ONRR with a minimum one-
year period of coverage subject to automatic renewal up to five years.


Sec.  226.185  ONRR's determination of bond or surety instrument 
amount.

    (a) The ONRR bond-approving officer may approve an appellant's 
surety if they determine that the amount is adequate to guarantee 
payment. The amount of the appellant's surety may vary depending on the 
form of the surety and how long the surety is effective.
    (b) The amount of the ONRR-specified surety instrument must include 
the principal amount owed under the order plus any accrued interest 
ONRR determines is owed plus projected interest for a one-year period.
    (c) If an appeal is not decided within one year from the date of 
filing, the appellant must increase the surety amount to cover 
additional estimated interest for another one-year period. The 
appellant must continue to increase the surety amount annually on the 
date of filing for the duration of the appeal. ONRR will determine the 
additional estimated interest and notify the appellant of the amount so 
it can amend your surety instrument.
    (d) The appellant may submit a single surety instrument that covers 
multiple appeals. The appellant may change the instrument to add new 
amounts under appeal or remove amounts that have been adjudicated in 
their favor or that they have paid if they:
    (1) Amend the single surety instrument annually on the date they 
filed their first appeal; and
    (2) Submit a separate surety instrument for new amounts under 
appeal until they amend the instrument to cover the new appeals.

Appendix A to Part 226--Table of Atmospheric Pressures

----------------------------------------------------------------------------------------------------------------
                                      Atmos.       Elevation (ft      Atmos.       Elevation (ft      Atmos.
       Elevation (ft msl)         pressure (psi)       msl)       pressure (psi)       msl)       pressure (psi)
----------------------------------------------------------------------------------------------------------------
0...............................           14.70           4,000           12.70           8,000           10.92
100.............................           14.64           4,100           12.65           8,100           10.88
200.............................           14.59           4,200           12.60           8,200           10.84
300.............................           14.54           4,300           12.56           8,300           10.80
400.............................           14.49           4,400           12.51           8,400           10.76
500.............................           14.43           4,500           12.46           8,500           10.72
600.............................           14.38           4,600           12.42           8,600           10.68
700.............................           14.33           4,700           12.37           8,700           10.63
800.............................           14.28           4,800           12.32           8,800           10.59
900.............................           14.23           4,900           12.28           8,900           10.55
1,000...........................           14.17           5,000           12.23           9,000           10.51
1,100...........................           14.12           5,100           12.19           9,100           10.47
1,200...........................           14.07           5,200           12.14           9,200           10.43
1,300...........................           14.02           5,300           12.10           9,300           10.39
1,400...........................           13.97           5,400           12.05           9,400           10.35

[[Page 2500]]

 
1,500...........................           13.92           5,500           12.01           9,500           10.31
1,600...........................           13.87           5,600           11.96           9,600           10.27
1,700...........................           13.82           5,700           11.92           9,700           10.23
1,800...........................           13.77           5,800           11.87           9,800           10.19
1,900...........................           13.72           5,900           11.83           9,900           10.15
2,000...........................           13.67           6,000           11.78          10,000           10.12
2,100...........................           13.62           6,100           11.74          10,100           10.08
2,200...........................           13.57           6,200           11.69          10,200           10.04
2,300...........................           13.52           6,300           11.65          10,300           10.00
2,400...........................           13.47           6,400           11.61          10,400            9.96
2,500...........................           13.42           6,500           11.56          10,500            9.92
2,600...........................           13.37           6,600           11.52          10,600            9.88
2,700...........................           13.32           6,700           11.48          10,700            9.84
2,800...........................           13.27           6,800           11.43          10,800            9.81
2,900...........................           13.22           6,900           11.39          10,900            9.77
3,000...........................           13.17           7,000           11.35          11,000            9.73
3,100...........................           13.13           7,100           11.30          11,100            9.69
3,200...........................           13.08           7,200           11.26          11,200            9.65
3,300...........................           13.03           7,300           11.22          11,300            9.62
3,400...........................           12.98           7,400           11.18          11,400            9.58
3,500...........................           12.93           7,500           11.13          11,500            9.54
3,600...........................           12.89           7,600           11.09          11,600            9.50
3,700...........................           12.84           7,700           11.05          11,700            9.47
3,800...........................           12.79           7,800           11.01          11,800            9.43
3,900...........................           12.74           7,900           10.97          11,900            9.39
----------------------------------------------------------------------------------------------------------------

    Calculated as:

Palm = 14.696 x (1x0.00000686E)525577

    From: U.S. Standard Atmosphere, 1976, U.S. Government Printing 
Office, Washington, DC 1976.


Bryan Newland,
Assistant Secretary--Indian Affairs.

[FR Doc. 2022-28098 Filed 1-12-23; 8:45 am]
BILLING CODE 4337-15-P